Arthur Hayes Links Bitcoin Crash to BlackRock Bitcoin ETF Flows

Bitcoin and other major cryptocurrencies are showing signs of short-term recovery after a recent sharp drop, with prices bouncing off key support levels. Analysts say this rebound may indicate the worst of the recent sell-off is over, at least for now.

Bitcoin found support at $60,000, which is now acting as a short-term floor. Ethereum, XRP, Solana, and Chainlink have also bounced, suggesting the recovery is affecting the wider crypto market.

Stock Market Bounce Adds Support to Crypto

The crypto recovery happened at the same time as a small bounce in U.S. stocks. The S&P 500 rose slightly as the week ended, showing that traditional markets and cryptocurrencies often move together. Analysts say this stock market bounce may have helped Bitcoin and other cryptocurrencies start to recover.

While the recent rebound is encouraging, some experts caution that the prior crash was influenced by more than just market sentiment.

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Arthur Hayes: ETF Hedging Behind the Crash

BitMEX co-founder Arthur Hayes offered a structural explanation for the decline. He believes the Bitcoin sell-off is not just panic-driven but also linked to dealer hedging related to structured products tied to BlackRock’s iShares Bitcoin Trust (IBIT). As IBIT shares fell sharply, banks and dealers were forced to rebalance their positions, triggering aggressive selling in Bitcoin and related derivatives.

Hayes noted that such mechanical selling can create sudden and dramatic price swings, especially in fragile markets. He is compiling a detailed list of bank-issued notes to identify key triggers that could cause rapid moves in either direction.

ETF Flows Highlight Structural Pressure

Recent spot Bitcoin ETFs have been net sellers, supporting Hayes’ view. Nearly $1.2 billion has flowed out of spot Bitcoin ETFs over the last three trading days, led by BlackRock’s IBIT. Meanwhile, IBIT recorded a record $10 billion in trading volume as its share price fell 13% in a single session, its second-largest daily drop since launch.

Rather than signaling strong demand, this surge in volume reflects stress, hedging, and forced repositioning. It underscores that structural flows are becoming a dominant factor in Bitcoin’s price movements.

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