Bitcoin’s Week‑Long Sell‑off Triggers Hedge‑Fund Speculation Around BlackRock’s iShares Bitcoin Trust (IBIT)
By [Your Name] – Feb 7 2026
Summary
Bitcoin slid about 16 % over the past seven days, touching the $62 000 level on Thursday before clawing back to roughly $70 400 on Friday, according to CoinGecko data. The sharp move coincided with an unprecedented surge in trading activity on BlackRock’s iShares Bitcoin Trust (ticker IBIT), the world’s largest Bitcoin‑focused exchange‑traded fund (ETF).
A handful of market participants, led by Parker White – chief operating officer and chief investment officer of DeFi Development Corp – have suggested that the price drop may have been driven not by retail panic but by one or more Hong‑Kong‑based hedge funds off‑loading sizable IBIT positions. While the hypothesis remains unverified, it has sparked a broader conversation about the growing influence of institutional vehicles on crypto price dynamics.
What Happened on the ETF
| Metric | Value (Thursday) |
|---|---|
| Daily trading volume on IBIT | ≈ $10.7 bn (record high) |
| Net outflows from the fund | ≈ $175 m |
| Share of Bitcoin options traded through IBIT | ~ 100 % of the U.S. Bitcoin‑options market (according to industry data) |
The volume spike was far larger than the modest net outflow, indicating a high level of turnover rather than a simple net sell‑off.
The Hedge‑Fund Theory
White’s assessment, posted on X (formerly Twitter), points to several anomalous market signals that, in his view, differentiate the recent decline from a typical retail‑driven correction:
-
Low liquidation rates on centralized exchanges (CeFi).
Compared with the magnitude of the price drop, the number of forced liquidations of leveraged positions on platforms such as Binance, Coinbase, and Kraken was relatively muted. -
Synchronous movement of Bitcoin and Solana.
Bitcoin and Solana (SOL) fell in near lock‑step, a pattern that deviates from SOL’s usual beta relationship with BTC. -
Concentration of IBIT holdings.
Public filings reveal that a limited set of funds hold a disproportionately large percentage of IBIT’s assets, with several of those funds domiciled in Hong Kong. - Unusual options activity.
Since IBIT has become the primary conduit for Bitcoin options in the United States, a sizable options position being unwound could generate rapid price pressure on the underlying spot market.
White also highlighted the performance of DeFi Development Corp’s own vehicle, the $DFDV fund, which logged its steepest single‑day decline on record and a notable dip in its net asset value (NAV). He argues that a hedge fund that maintains a large IBIT exposure through a single‑entity structure would typically operate multiple vehicles, making the $DFDV decline an additional breadcrumb.
Industry Reaction
Rob Wallace, co‑founder of BitcoinNews.com, echoed parts of White’s reasoning, noting that the characteristics of the sell‑off—high volume, limited retail liquidation, and coordinated movement across assets—are more reminiscent of institutional repositioning than of a mass‑panic sell‑off. Wallace added that the growth of IBIT as a bridge between traditional finance and cryptocurrency markets makes it a natural target for large‑scale strategic trades.
Nevertheless, analysts caution that the hypothesis remains speculative until a formal filing (e.g., a Form 13F, 13D, or a disclosure under the Investment Company Act) confirms a reduction in a substantial IBIT position.
Broader Implications
- Institutional Leverage on Price: The event underscores how the concentration of Bitcoin exposure in a single ETF can translate into outsized price moves when large players adjust their holdings.
- Regulatory Transparency: As ETFs become the primary gateway for institutional capital, regulators may face heightened pressure to require more granular, real‑time reporting of large position changes.
- Market Signals for Traders: Traditional crypto traders should monitor ETF flows and options markets as leading indicators of potential macro‑level shifts, rather than relying solely on on‑chain metrics.
Key Takeaways
- Record IBIT activity (over $10 bn in daily volume) coincided with Bitcoin’s 16 % weekly decline.
- Low CeFi liquidations and an unusual BTC‑SOL correlation suggest the sell‑off may not have originated from retail traders.
- Hong‑Kong‑based hedge funds have been identified as possible drivers, based on public filings showing heavy IBIT concentration among a few local vehicles.
- IBIT now dominates U.S. Bitcoin options trading, raising the likelihood that large options positions can influence spot prices.
- Confirmation awaits regulatory disclosures; until then, the theory remains an informed speculation.
The story continues to develop as more data emerges from filing disclosures and market participants. Readers are encouraged to track IBIT flow reports, options activity, and institutional filings for the next clues about Bitcoin’s price trajectory.
Source: https://thedefiant.io/news/markets/bitcoin-selloff-sparks-hedge-fund-speculation-around-blackrock-etf
