Arthur Hayes, founder of BitMEX, pointed to hedges tied to BlackRock’s iShares Bitcoin Trust (IBIT) as the main driver behind the recent Bitcoin selloff.
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According to Hayes, seller hedging related to IBIT and similar structured products can force large, mechanical sales when markets move against those positions.
Reports note that such a move could exacerbate price declines that have already been triggered by other pressures.
Heavy Hedges May Cause Sudden Selling Pressure: Hayes
Hayes argues that banks and brokers who underwrite structured notes and ETF-linked products typically hedge their exposure to the spot and derivatives markets.
Those sites can be hard and fast. When a major product faces exit or redemption triggers, hedges are quickly adjusted. That can translate into sudden sales pressures that drive prices down further, especially if cash is tight.
$BTC get lost maybe because of the seller fenced in the back $IBIT structured products. I will be compiling a complete list of all the notes issued by the banks to better understand the points that can cause the price to rise and fall quickly. As the game changes, so should you. pic.twitter.com/9DF8VE9XBL
— Arthur Hayes (@CryptoHayes) February 7, 2026
Market Moves And Liquidity Stress
The market behaved like a room of people trying to exit at the same time. Prices went down, then up. Reports say that Bitcoin has fallen sharply from its recent highs before experiencing a slight recovery.
Bitcoin fell to around $68,500 on Saturday, down 16% over the past seven days, data from Coingecko shows.
Trade and order books showed spikes in volume, one sign that hedging flows and rapid rebalancing were at play. Some analysts say the big news and the stalling of traders are also important. The truth probably lies in the accumulation of these causes.
Who is at Risk
Sellers bear the risk when underwriting complex products. At times, that risk is transferred back to the market through hedges. That’s how, according to Hayes, a few large issuers can inadvertently set off a backlash that affects many other owners and sellers. Movement can be sudden and mechanical, not always driven by emotions.
Washington Waiting
Reports say that the role of ETFs in the crypto market is now on the radar of regulators and policymakers. US President Donald Trump’s economic team has been monitoring large inflows and outflows from institutional vehicles, while market participants debate whether ETFs are stabilizing prices or adding new stress points.
Regardless of the view, structured products now make a clear link between traditional currencies and crypto volatility.
The takeaways are extensive
This episode emphasizes how new financial pipelines can create new channels of contagion. Others see the presence of large, regulated players as an advantage for long-term acquisitions.
Others warn those same players are introducing standard market mechanics that can behave unpredictably if stretched. Reports note that both theories are useful in explaining why prices moved the way they did.
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Who’s Right, and What’s Next
Hayes proposed a theory that includes the apparent flow of the crash flow. It’s a compelling series that matches many of the market signals seen in recent days.
However, other factors – large shifts, concentrated profit-taking, and liquidity gaps – may also have played parts. Traders will watch the flow closely, and structured product issuers will be asked tough questions.
Featured image from Unsplash, chart from TradingView
