Arthur Hayes Links Bitcoin Crash to BlackRock’s IBIT

Arthur Hayes, the co-founder of BitMEX, has spoken out about Bitcoin’s recent price drop. He believes that special investment products linked to BlackRock’s iShares Bitcoin Trust (IBIT) helped trigger the sharp fall.

As Bitcoin tries to recover after the big drop, people in the crypto industry are blaming large institutions and their trading activities for adding pressure to the market.

Hayes Says Institutional Products Worsened Bitcoin Crash

The crypto market has gone through one of its biggest drops in a long time. Trillions of dollars were wiped out, and many investors lost confidence. Arthur Hayes says the crash was likely made worse by dealer hedging linked to BlackRock’s IBIT investment products.

He explained that banks and dealers behind these products were forced to sell large amounts of Bitcoin very quickly after prices fell below certain levels. This sudden selling pushed prices down even more and made the crash happen faster.

Hayes also said he is putting together a wider list of similar bank-issued products to find price levels that can trigger sharp market moves. Some market data support his view. 

The report shows a Morgan Stanley product issued near Bitcoin’s October peak had a key trigger level around $78,700. When Bitcoin dropped below that level, dealers had to sell Bitcoin to reduce risk. This added more selling pressure and increased market volatility.

Bitcoin Crash Wipes Out Trillions as Market Volatility Spreads

Bitcoin fell as low as $60,000 during the market crash, dropping more than 50% from its record high. The fall caused investors to pull out large amounts of money from crypto. Overall, the total value of the crypto market dropped by nearly $2 trillion from its peak of about $4.38 trillion last October.

Even with the damage, Bitcoin has started to recover. After being down about 30% this year, the price moved back above $70,000 on Friday, rising by more than 7%. Still, many investors remain worried about deeper problems in the market.

The crash also affected other financial markets. Silver alone fell by more than 18% after a strong rise. Stocks closely tied to Bitcoin, such as Strategy’s MSTR, also dropped as market confidence weakened. 

Institutional Selling Weighs on Bitcoin Prices

Data from CryptoQuant shows that big investors are buying less Bitcoin. U.S.-listed Bitcoin ETFs, including BlackRock’s IBIT, have moved from recording heavy inflows to seeing large scale withdrawals regularly this year. This shift has helped push Bitcoin prices down.

CryptoQuant analysts say this steady selling shows that institutions are losing interest in crypto due to high volatility. Bitcoin previously surged when Donald Trump returned to the White House, driven by expectations of more supportive crypto regulation. Optimism also grew because of his family’s involvement in a crypto-related venture. 

However, these political hopes failed to shield the market from broader financial pressures. Despite favorable expectations, Bitcoin continues to respond mainly to liquidity conditions, institutional positioning, and global risk sentiment.