Thursday’s trading session for BlackRock’s iShares Bitcoin Trust (IBIT) wasn’t a correction. It was a liquidation event. The world’s largest Bitcoin fund skidded 13% to under $35. Its lowest price since October 2024—amid a chaotic frenzy that shattered every liquidity record on the books.
Volume for the ETF exploded to 284 million shares, representing over $10 billion in notional value. That figure dwarfs the previous record of 169 million shares set in November. But the real carnage happened in the derivatives market.
The $900 Million Premium Spike
Options activity didn’t just rise; it broke the machinery. A record 2.33 million contracts changed hands, generating an unprecedented $900 million in premium payments in a single session. This wasn’t retail speculation. It was institutional desperation.
Data from Nasdaq and SoSoValue confirms the panic was one-sided. Put options commanded premiums 25 volatility points higher than calls, a historic dislocation indicating that market makers were aggressively pricing in a catastrophe.
The "Blowup" Theory
The sheer velocity of the sell-off has validated rumors of a forced liquidation event. Parker White, CIO at DeFi Dev Corp, stated the crash bears the hallmarks of a specific entity blowing up. The working theory: a non-crypto hedge fund, likely based in Hong Kong, was leveraged long on IBIT calls funded by a Japanese Yen carry trade.
"The record $900 million in premium payments indicates massive, leveraged bets were being unwound… forcing them to dump IBIT shares and aggressively close positions."
As Bitcoin slid to $60,000, these out-of-the-money calls became toxic collateral. Margin calls forced the fund to dump spot IBIT shares to cover the hole, creating a feedback loop that dragged the entire market down.
Counterpoint: Systemic De-Risking
Not everyone buys the single-fund narrative. Tony Stewart, founder of Pelion Capital, argues the data is inconclusive. He notes that $150 million of the premium volume came from short put sellers buying back their positions to cap losses, a standard risk management move during a crash, not necessarily a sign of a singular entity failing.
Shreyas Chari of Monarq Asset Management offered a grimmer take, suggesting the selling was systematic. "Rumors swirled of a short options entity that had to sell the underlying far more aggressively after $70k and then $65k broke," Chari noted.
The fallout has already triggered a broader exodus. IBIT saw $175 million in outflows on Thursday alone, accounting for 40% of all net outflows across U.S. Bitcoin ETFs. The market is now waiting for the next shoe to drop: the filing of 13F reports in May, which will reveal exactly who was holding the bag.
