‘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.

Balchunas wrote on X that IBIT's short interest has "plummeted" from roughly 2% of shares outstanding to a fraction of that, citing data from S3 Partners. 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.

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.

Bitcoin (BTC) Price Chart. Source: The Block/TradingView