Did Bitcoin Just Break a Multi-Billion Dollar Hong Kong Hedge Fund? Here’s What’s Really Happening

Why this report matters

During Bitcoin corrections, trading activity in BlackRock’s IBIT Bitcoin ETF tends to surge, with volumes expanding significantly as institutional positioning adjusts. During the most recent selloff, daily trading volume exceeded $10 billion, underscoring the scale of institutional capital's active repositioning.

Blackrock IBIT Bitcoin ETF (LHS) vs. IBIT Trading Volumes (US$, RHS)

Bitcoin’s rapid decline from $90,000 to $60,000 in just two to three weeks caught many traders off guard, both in speed and magnitude. The sharp increase in ETF trading volume during this period suggests that the move was not driven by retail panic, but rather by large-scale institutional flows, hedging activity, and the unwinding of structured positions.

What is most striking is not the magnitude of the move, but how few market participants can clearly explain the underlying drivers. Much of the discussion has focused on isolated events rather than a comprehensive analysis of on-chain activity, positioning, and market structure, which provide far deeper insight into what is happening beneath the surface.

Some observers have pointed to record trading volumes in BlackRock’s IBIT ETF and the simultaneous spike in implied volatility as evidence that ETF-related flows triggered the correction. Others have highlighted the role of Asia, and specifically Hong Kong–based hedge funds, noting that volatility in other high-beta assets such as silver has also been concentrated during Asian trading hours. As we previously noted, nearly all of silver’s gains over recent months occurred during Asian sessions, reinforcing the view that regional positioning and balance sheet deployment have played an outsized role in recent market dynamics.

In the absence of a clear structural framework, this has led to speculation that the potential distress or unwinding of a multi-billion-dollar Hong Kong hedge fund may be the primary cause of Bitcoin’s decline. However, while these narratives are gaining traction, they risk oversimplifying a far more complex set of structural forces. Below, we assess the likelihood that the “unwinding” of a specific Hong Kong–based hedge fund is driving the move and, more importantly, what this reveals about the true state of the Bitcoin market and the success of the ETFs.

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