While spot Bitcoin ETFs are cited as one of the key factors behind Bitcoin’s recent weakness, BlackRock, the manager of IBIT, the largest spot Bitcoin ETF, has challenged this view.
Mitchnick countered claims that IBIT’s activities caused market volatility, stating that only 0.2% of the fund’s assets were withdrawn.
In contrast, Mitchnick highlighted that institutional investors, governments, and banks actively buy Bitcoin during price dips, noting that volatility is more pronounced on leveraged perpetual futures platforms than on BlackRock’s ETF.
“There’s a misconception that hedge funds are maliciously selling within ETFs to create volatility. Some believe hedge funds are deliberately creating volatility in ETFs and then triggering sell-offs, but the data we’re seeing doesn’t support that.”
Although the Bitcoin market experienced a rather turbulent week last week, only 0.2% of fund assets were withdrawn from IBIT. If hedge funds had held large positions through ETFs and then suddenly liquidated them, there would have been an outflow of billions of dollars. However, in reality, unlike the billions of dollars liquidated on leveraged platforms, ETF flows were very stable.”
The BlackRock executive concluded by stating that the IBIT fund’s capital base is extremely solid and long-term.
*This is not investment advice.