Arthur Hayes Attributes Bitcoin Crash to ETF-Linked Dealer Hedging

BitMEX co-founder Arthur Hayes says institutional dealer hedging tied to BlackRock’s iShares Bitcoin Trust (IBIT) is amplifying recent Bitcoin price declines. He pointed to structured financial products linked to IBIT and argued that falling prices force institutions that issue these notes to sell the underlying asset to manage risk, a practice known as delta hedging.

Those structured notes are often issued by major banks to give institutional clients Bitcoin exposure and include risk-management features such as principal-protection levels. When market prices hit those pre-set thresholds, dealers must aggressively adjust positions to remain risk-neutral, creating a feedback loop in crypto that can accelerate selling.

Hayes emphasized that derivatives "don’t cause moves, they amplify in both directions" and said he does not believe there is a "secret plot" to crash the market. Other market participants offered an alternative view.

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