Are Hedge Funds the Driving Force Behind Bitcoin's Volatile Week? BlackRock's IBIT Faces Renewed Scrutiny

Hedge Fund Exposure: Hedge fund exposure to BlackRock's iShares Bitcoin Trust (IBIT) has come under scrutiny following claims about options limits, with Bitwise portfolio manager Jeff Park clarifying that IBIT continues to operate under a $250,000 contract position cap.

Market Sentiment: Retail sentiment around IBIT remains extremely bullish, with the fund trading at $39.66 and closing up over 9% on Friday, despite reports of significant net outflows from Bitcoin ETFs.

SEC Proposals: A separate SEC proposal to raise IBIT's contract limit to one million contracts remains unapproved, while the SEC's filing rules apply to other Bitcoin and Ethereum ETFs seeking relief from the $250,000 cap.

Trading Activity: IBIT recorded high trading volumes and net outflows, with banks hedging positions linked to IBIT, leading to a sell-off in Bitcoin as they sought to safeguard their investments amid market volatility.