BlackRock’s Bitcoin Fund Reaches $10 Billion, Indicating Peak Selling
BlackRock’s Bitcoin fund has reached a significant milestone, hitting a record trading volume of over 284 million shares on Thursday. The spot Bitcoin exchange-traded fund (ETF), known as IBIT, achieved a notional value exceeding $10 billion. This new record shattered the previous high of 169.21 million shares set on November 21 by an impressive 169%.
IBIT’s Performance and Market Impact
Despite the trading frenzy, IBIT’s price fell by 13%, dropping below $35. This marks the lowest price point since October 11, 2024, extending its year-to-date decline to 27%. Earlier this month, the fund had peaked at $71.82.
Fund Redemption Trends
- On Thursday, IBIT saw redemptions amounting to $175.33 million.
- This accounted for 40% of a total net outflow of $434.11 million across 11 funds.
- The data was provided by SoSoValue.
IBIT is recognized as the largest publicly listed Bitcoin fund. It holds actual Bitcoin and aims to reflect the market price of the cryptocurrency, which recently dropped close to $60,000.
Market Dynamics and Investor Sentiment
The sharp increase in trading volume, coupled with the price drop, indicates possible capitulation among investors. This scenario often points to long-term holders selling at losses. The current market behavior may suggest that we are seeing peak selling in the bear market, potentially heralding a difficult period of bottoming out.
Options Trading Insights
Trading in IBIT options on the same day reinforced these sentiments. The market saw a surge in longer-duration put options. These contracts, which are typically used to protect against market downturns, reached a premium of over 25 volatility points above call options, which reflect bullish bets. This trend indicates heightened anxiety among investors.
While these market signals are notable, it is essential to recognize that bear markets can extend longer than expected. Investors must exercise caution, as the market’s volatility presents ongoing risks.
