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BlackRock’s Bitcoin fund reaches $10 billion in trading volume, suggesting potential peak selling activity.
Unprecedented trading volume, redemptions, and a significant inclination towards put options indicate institutional capitulation.
IBIT records its busiest day ever. (geralt/Pixabay)
Key points:
- BlackRock’s spot bitcoin ETF, IBIT, experienced unprecedented trading volume exceeding 284 million shares on Thursday, surpassing $10 billion in notional value and breaking its previous volume record.
- This trading surge coincided with a 13% decrease in IBIT’s price, dropping below $35, marking its lowest level since October 2024, and extending its year-to-date decline to 27% amid a significant bitcoin sell-off.
- Substantial redemptions, record trading volume, and a notable bias towards put options indicate capitulation and peak anxiety among investors, possibly signaling the severe selling phase of an extended bear market.
Discussion of intense trading activity.
On Thursday, BlackRock’s spot Bitcoin exchange-traded fund, known as IBIT, recorded an extraordinary milestone with over 284 million shares traded, according to Nasdaq data. This represents more than $10 billion in notional value.
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In perspective, this surpassed the previous record of 169.21 million shares set on November 21 by an impressive 169%.
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The record trading volume occurred as IBIT fell 13% to below $35, its lowest since October 11, 2024, adding to its year-to-date loss of 27%. The highest price recorded was $71.82 in early October.
The fund processed redemptions totaling $175.33 million on Thursday, representing 40% of the total net outflow of $434.11 million across 11 funds, as reported by SoSoValue.
IBIT, recognized as the world’s largest publicly traded bitcoin fund, holds actual bitcoins and aims to reflect the spot price of the leading cryptocurrency, which has recently been declining, plummeting to nearly $60,000 on Thursday. The fund has been a favored alternative investment option for institutions seeking regulated exposure to cryptocurrency.
Indications of capitulation
The combination of record trading volume and price declines frequently indicates capitulation—long-term holders liquidating their assets at a loss.
This signifies the peak selling phase of a bear market, potentially indicating the onset of a gradual, difficult bottoming process.
Options trading for IBIT on Thursday reflected a similar narrative. Longer-term put options, or contracts employed to protect against downturns, achieved a record premium of over 25 volatility points above call options (bullish bets), as per data from MarketChameleon.
This strong preference for put options often signifies peak fear as well.
However, it is essential to note that there are no guarantees, as bear markets can persist longer than even those purchasing dips can remain solvent.
