Bitwise Advisor Market Selloff Retrospective: Selling Pressure Primarily from Paper Hands and Non-Directional Trades, Not Long-Term Fund Outflows

BlockBeats News, February 8th. Bitwise advisor Jeff Park posted a retrospective on the recent market crash. He first clarified that the claim that "Nasdaq has lifted the IBIT option position limit, providing Wall Street with unlimited leverage" is not true. The Belvedere IBIT and BITB have always had a 250,000 standard position limit. The SEC's related filings only raised the position limit of spot ETFs such as FBTC and ARKB to 250,000 shares to align with the IBIT and BITB position limits to ensure fair market competition. In November last year, Belvedere IBIT applied to raise the limit from $250,000 to $1 million but was not approved.

Regarding the cause of the market crash, Jeff Park indicated that it was more likely triggered by risk-off behavior in the traditional financial system and derivative mechanisms, rather than a fundamental change in the crypto industry or a single "black swan" event. On that day, Bitcoin ETFs, especially IBIT, saw record trading volume and options trading activity, with options trading predominantly in the bearish direction. Bitcoin experienced a more than 13% drop in two days. The market initially expected significant outflows from ETFs, but actual data showed net inflows. This indicates that selling pressure mainly came from "paper money" and non-directional trades related to hedging and market making, rather than long-term fund outflows. The change in ETF net flows in the coming days will be a key indicator to assess whether there is new long-term demand.