WHAT TO KNOW: Options trading on BlackRock’s spot bitcoin ETF, IBIT, surged to a record 2.33 million contracts and $900 million in premiums as the fund fell 13% to its lowest level since October 2024. One camp, led by analyst Parker, attributes the record options activity and heavy selling to a leveraged hedge fund blowup that dumped IBIT shares amid margin calls, intensifying the crash. Another camp argues the flows largely reflect broad market panic and routine risk management rather than a single catastrophic fund failure, underscoring that IBIT options now meaningfully influence crypto markets. According to one observer, the record activity stemmed from a hedge fund blowup, while others disagreed, citing routine market chaos as a catalyst.
Shreyas Chari, director of trading and head of derivatives at Monarq Asset Management put it best: “Systematic selling across the majors yesterday probably tied to margin calls especially in the ETF with the highest crypto exposure IBIT.” This hedge fund blowup theory is inconclusive from the Options standpoint. It also doesn’t seem enough in size, he concluded. Tony Stewart, founder of Pelion Capital and an options expert, believes IBIT options added to the market chaos, but doesn’t go so far as to blame a single fund blowup for the whole crash and record activity. He argued on X, citing Amberdata, that $150 million of the $900 million in premiums came from buying back put options.
In essence, to Stewart, the record activity is just the messy noise of a broadly panicked market, not a smoking gun pointing to a single way. Still, he acknowledged the possibility that some activity could have been hidden in over-the-counter (privately negotiated) deals. While Parker connected the dots to point to a hedge fund blowup, Stewart challenged the same with hard data. In any case, this episode highlights that IBIT options are now large enough to wield influence, and traders might want to keep track of them just as they do ETF inflows.
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