NYDIG released an analysis suggesting that a large sell order of $1.26 billion in BlackRock's spot Bitcoin ETF, IBIT, is more likely a large investor quickly exiting a position, rather than the basis trading liquidation that the market had previously speculated.

Transaction at a 2.3% discount

The transaction was completed at a discount of approximately 2.3%, meaning the seller accepted a price concession of about $29.5 million to expedite the deal. NYDIG believes this transaction method demonstrates that the seller prioritized speed and certainty over maximizing the selling price.

The transaction was reported through the FINRA/Nasdaq TRF Carteret facility. This type of channel is typically used for large transactions negotiated off-exchange.

Basis trading claims questioned

Some market participants had previously speculated that this sell order might be related to Bitcoin basis trading. Such strategies typically involve holding a spot position while simultaneously shorting futures contracts to profit from the price difference between the spot and futures markets.

However, NYDIG argues that this explanation is invalid. One reason is that a 2.3% discount is too large, significantly reducing the potential returns of such strategies.

CME did not see a simultaneous increase in volume.

NYDIG also compared the trading volume of Bitcoin futures on the CME Group. According to their calculations, the risk exposure corresponding to this IBIT position is roughly equivalent to about 3,700 CME Bitcoin futures contracts.

However, within the minute that the block trade was executed, CME only traded 91 related contracts, without a significant increase in volume. NYDIG concluded that this trade did not appear to be a simultaneous closing of short positions in futures.

Greg Cipolaro, Global Head of Research at NYDIG, said that considering factors such as the transaction size, the discount, the lack of synchronized movement in the futures market, and the limited range of potential sellers, this transaction is unlikely to be a simultaneous withdrawal of a basis trade.

During the period of continuous outflow from ETFs

This transaction occurred amid continued outflows from US spot Bitcoin ETFs. SoSoValue data shows that from May 15 to May 29, these funds recorded net outflows every trading day.

During the same period, total assets in spot Bitcoin ETFs fell from $107.75 billion on May 14 to $94.17 billion on May 29. The article also noted that Bitcoin has fallen by about 16% this year, while most other assets, such as stocks and commodities, have risen, indicating continued capital outflows from the crypto market.

NYDIG also pointed out that although IBIT recorded a total of approximately $720 million in net redemptions on May 26 and 27, it is not possible to directly identify the specific seller of this large sell order based solely on ETF creation and redemption data, nor is it possible to confirm that it corresponds one-to-one with a particular redemption.

The agency also stated that this position is larger than all disclosed IBIT investor positions in publicly available 13F filings, making it difficult to identify the seller through publicly available information. Existing data also fails to determine whether this reduction was driven by investor redemptions, risk control measures, or a proactive effort to reduce Bitcoin exposure.