BitMEX co-founder Arthur Hayes suggested that the recent sharp sell-off in Bitcoin (BTC) may be due to “dealer hedging” transactions involving structured products linked to the iShares Bitcoin Trust (IBIT) issued by banks.
According to Hayes, hedging activities, particularly those involving institutional products, may have triggered sudden and sharp price movements in the market.
Dealer hedging transactions are known as counter-transactions undertaken by a financial institution (typically a bank or large brokerage firm) to offset the risk arising from a product it sells to customers.
Hayes stated in a social media post, “The decline in BTC is likely due to dealer hedging against IBIT structured products.” He mentioned that he has begun compiling a comprehensive list of all structured notes issued by banks, aiming to better understand the mechanisms that could cause rapid price increases and decreases by analyzing potential trigger levels in these products. “As the game changes, you need to change too,” he added.
Bitcoin fell below $64,000 on Thursday, reaching its lowest level since October 2024. The largest cryptocurrency has lost more than 45% of its value since reaching its record high last year. The latest sell-off wiped out all the gains investors had made with the start of Donald Trump’s second presidential term.
*This is not investment advice.
