A $1.26 billion block sale of BlackRock’s iShares Bitcoin Trust (IBIT) shares this week likely reflected a large investor moving quickly out of bitcoin exposure rather than the unwind of a hedge-fund arbitrage trade, according to analysis from NYDIG. The transaction took place on May 26, when 29.21 million IBIT shares changed hands off-exchange at $43.16 per share—a $1.01 discount to IBIT’s market price of $44.17 at the time. That 2.3% discount created approximately $29.5 million in execution costs for the seller.
The trade, executed through the FINRA/Nasdaq TRF Carteret facility for privately negotiated off-exchange transactions, drew widespread attention amid a sustained period of outflows from U.S. spot bitcoin ETFs. NYDIG’s global head of research Greg Cipolaro pushed back against speculation that the sale was part of a bitcoin basis trade unwind. He cited two main reasons: first, the 2.3% discount would have significantly eroded the return profile of such a strategy, making it difficult to justify a $29.5 million cost to exit the ETF leg; second, there was no corresponding surge in CME bitcoin futures volume. NYDIG estimated the IBIT sale represented exposure equivalent to about 3,700 CME bitcoin futures contracts, yet only 91 contracts traded during the minute of the block execution, with no unusual spike in activity.
“The size of the trade, the 2.3% execution discount, the absence of corresponding CME futures activity, and the limited universe of potential sellers collectively weigh against the view that the transaction represented a contemporaneous basis-trade unwind,” Cipolaro wrote.
The sale occurred during a weak period for U.S. spot bitcoin ETFs, which recorded daily net outflows every trading day from May 15 through May 29. Total assets across the category fell from $107.75 billion on May 14 to $94.17 billion by May 29. IBIT itself logged about $720 million in net redemptions across May 26 and May 27. NYDIG cautioned, however, that ETF flow data cannot directly identify the seller or prove any specific redemption was tied to the block sale. The size of the trade exceeded the reported holdings of every disclosed IBIT investor in recent 13F filings, making the seller difficult to pinpoint. NYDIG concluded the sale was probably not a clean arbitrage unwind but a fast reduction in bitcoin-linked exposure at a time when the spot ETF market was already under pressure.
