In a dramatic display of market volatility, BlackRock’s spot Bitcoin exchange-traded fund (ETF), known as IBIT, witnessed a staggering trading frenzy on Thursday. According to Nasdaq data, more than 284 million shares changed hands, translating to over $10 billion in notional value. This figure not only shattered the previous record of 169.21 million shares traded on November 21 but did so with a striking increase of 169%.
The trading volume surge coincided with a noteworthy decline in IBIT’s share price, which slipped 13% to settle at under $35—a level not seen since October 11, 2024. This downturn extended the ETF’s year-to-date loss to 27%, following a peak of $71.82 reached in early October. Compounding the woes, the fund processed redemptions totaling approximately $175.33 million on the same day. This amount represents 40% of the cumulative net outflow of $434.11 million recorded across 11 funds, according to data from SoSoValue.
As the world’s largest publicly traded Bitcoin fund, IBIT holds physical coins and is structured to closely mirror the spot price of Bitcoin—another factor in its current turmoil, as the cryptocurrency itself plunged to nearly $60,000 on Thursday.
The frenzy of trading activity may signal a moment of capitulation among long-term holders who are now offloading their assets at a loss, marking a pivotal phase in the ongoing bear market. Such circumstances often represent the peak selling stage of a downturn, indicating potential beginnings of a painful bottoming out process characterized by weak sentiment.
Options trading activity in IBIT on Thursday reinforced the prevailing fears. Longer-duration put options, which are typically used to hedge against downturns, soared to a record premium of over 25 volatility points above call options that represent bullish bets, as noted by data from MarketChameleon. This inclination towards put options suggests heightened anxiety among traders, adding to the narrative of peak fear.
While these indicators may suggest a turning point, market participants remain cautious, as history shows that bear markets can often extend well beyond the liquidity a typical dip buyer can maintain. Investors are left grappling with the uncertain dynamics of the cryptocurrency market, as bullish sentiments wane and bearish trends take hold.
