‘100% track record of coming back’: IBIT short interest sinks toward April lows as bitcoin bears unwind positions

Short interest in BlackRock's spot bitcoin ETF has dropped during the latest market sell-off, returning to levels last seen in April as traders unwind bearish positioning, according to Bloomberg Intelligence analyst Eric Balchunas.

While IBIT's short interest was never especially high, he noted that traders "short into strength and cover in downturns," a pattern visible across the broader bitcoin ETF complex.

When asked whether he expects further downside for IBIT, Balchunas simply stated: "I cannot predict the future. What I do know is this asset has a 100% track record of coming back from sometimes nasty downturns to hit all-time highs."

The dynamic mirrors the spring, when bitcoin plunged from its then-record $109,000, hit on the day President Donald Trump began his second term, to below $75,000 in early April during the onset of a trade war. ETF short interest also reset lower during that correction before the market rebounded by more than 50% to $112,000 just two months later.

This month’s retreat is occurring alongside one of the heaviest redemption cycles for crypto investment products since 2018. Global crypto ETPs saw $1.9 billion in net outflows last week, according to CoinShares, with U.S. spot bitcoin ETFs accounting for $1.2 billion of that, led by nearly $1.1 billion exiting IBIT.

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Despite the outflows, analysts say long-horizon holders continue to accumulate, and Friday marked the first positive flow day for bitcoin ETPs after a week of continuous redemptions.

Bitcoin is trading above $88,600 today, according to The Block's price page, with traders expecting it to drift between $85,000 and $90,000 in what they describe as a fragile, liquidity-thin range.