BlackRock’s Bitcoin ETF Could Trigger a $52B Sell-Off: Here’s Why

BlackRock’s IBIT lost $2.1B in 5 weeks as its private credit crisis sparks fears of a massive Bitcoin liquidation spiral.

BlackRock’s Bitcoin ETF, IBIT, is drawing serious attention. And not for good reasons. Crypto analyst Axel Bitblaze flagged a chain of events that could trigger a massive sell-off. 

His post on X has since sparked widespread discussion across the crypto community. The concern centers on BlackRock’s growing liquidity troubles and what they mean for Bitcoin.

BlackRock’s Private Credit Fund Is Cracking Under Pressure

BlackRock’s $26 billion private credit fund recently gated withdrawals for the first time. Investors requested $1.2 billion back. Only $620 million went through. That means 48% of withdrawal requests got blocked outright.

Blackstone had to inject $400 million of its own cash after facing record redemptions. Blue Owl went further and permanently halted withdrawals. The firm started issuing IOUs to investors instead. This is a $1.8 trillion market, and it is cracking.

BlackRock stock dropped 7% in a single day. KKR, Apollo, Carlyle, Ares, and TPG all fell between 5% and 7% on the same day. The sell-off hit every major alternative asset manager at once. That kind of synchronized drop signals deep systemic stress.

IBIT Outflows Are Already Accelerating

When investors cannot pull money from private credit funds, they do not wait. They sell whatever they can sell quickly. For BlackRock investors, that liquid asset is IBIT.

According to Bitblaze, IBIT shed 42,000 BTC from its peak holdings of 806,000. That is $2.1 billion in outflows from IBIT alone over just five weeks. 

Total Bitcoin ETF outflows across all funds hit $4.5 billion in 2026. 

ETF assets under management dropped from a $170 billion peak to roughly $85 billion. In the most recent week, BlackRock ranked as the largest seller, with $303 million in net outflows from IBIT in seven days.

IBIT currently holds 764,000 BTC. At current prices, that equals roughly $52 billion sitting inside one product. The average cost basis for ETF holders sits at $79,000. 

Bitcoin is trading near $68,000. That puts the average institutional ETF investor at a 14% unrealized loss.

Related Reading: Hong Kong Firm Puts 100% Into BlackRock’s IBIT, $436M Bet

A Liquidity Spiral Could Send Bitcoin Into a Deeper Drop

Bitblaze describes a feedback loop that starts with private credit and ends with Bitcoin. 

Private credit investors cannot withdraw. They panic and sell liquid assets to raise cash. That pushes IBIT outflows higher. BlackRock sells Bitcoin on the open market. 

Bitcoin price drops further. More ETF holders go underwater. Those holders panic sell. More outflows follow. More Bitcoin hits the market. Prices drop again. The loop continues.

Currently, 45% of all circulating Bitcoin supply sits at a loss. 

That is a large pool of holders already under stress. A sustained wave of institutional selling could push that number higher fast.

Bitblaze compared this dynamic to the FTX collapse and the Terra Luna crash. 

Both events involved a liquidity spiral where forced selling fed more selling. The difference, he noted, is that the current numbers are roughly 100 times larger.

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