Hedge fund exposure to BlackRock’s IBIT drew attention after options-limit claims were corrected and large institutional holdings came into focus.
- Hedge fund exposure to BlackRock’s iShares Bitcoin Trust came into focus after Bitwise portfolio manager Jeff Park corrected claims around IBIT options limits on Saturday.
- Park said IBIT continued to operate under a 250,000-contract position cap, while a separate SEC proposal to raise the limit to 1 million contracts remains unapproved.
- Brevan Howard, IBIT’s largest disclosed institutional holder with a reported $2.3 billion stake, drew attention after Bloomberg reported its fixed-income fund will shut to external capital.
Hedge fund exposure to BlackRock's iShares Bitcoin Trust (IBIT) came under fire on Saturday. The focus grew after Bitwise portfolio manager Jeff Park addressed misconceptions related to the ETF options limit.
Park said on X that reports claiming Nasdaq removed options position limits for IBIT were incorrect. He explained that IBIT continued to operate under the standard 250,000-contract position limit, adding that no rule change had granted unlimited leverage on the fund.
BlackRock’s iShares Bitcoin Trust (IBIT) was trading at $39.66 and closed up over 9% on Friday. On Stocktwits, retail sentiment around IBIT remained in the ‘extremely bullish’ zone, as chatter stayed in ‘extremely high’ over the past day.
He further explained that the Securities and Exchange Commission (SEC) filing circulating online applied to other spot Bitcoin and Ethereum ETFs seeking relief from a 25,000-contract cap. He added that a separate proposal filed in November to raise IBIT’s limit to 1 million contracts had not yet been approved, according to the Federal Register.
Attention has also turned to hedge fund positioning after disclosures showed Brevan Howard as the largest institutional holder of IBIT, with a reported $2.3 billion stake, according to public filing data. Bloomberg reported in late January that Brevan Howard’s $1.4 billion Fixed Income fund would shut to external capital by the end of June, a development that drew market attention amid elevated ETF trading activity.
Record IBIT Trading Sparked Initial Scrutiny
Previously, BitMex co-founder Arthur Hayes said that banks were hedging positions linked to the IBIT ETF, which is why Bitcoin sold off. He brought up Morgan Stanley's "structured note" associated with IBIT, which is essentially a bank wager on Bitcoin. In order to safeguard themselves, these banks had to sell as soon as Bitcoin’s price tanked.
Positions in highly leveraged IBIT ETFs had to unwind on Thursday, when the ETF posted record trading volume and elevated options turnover. IBIT also recorded daily net outflows of roughly $175 million that session, while total spot Bitcoin ETFs saw more than $430 million in net outflows.
On Saturday, Hayes noted he is compiling outstanding IBIT-linked structured notes to build an internal volatility surface for trading. He added that once the team identifies compelling trigger points, it plans to position accordingly and disclose the trades afterward.
Confirmation of any large institutional repositioning would only emerge through quarterly disclosures. U.S. hedge funds are required to report ETF holdings via Form 13F filings within 45 days of the end of each quarter, according to SEC rules.
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