- Hayes stated that the ongoing Bitcoin dump is a result of institutional dealer hedging.
- The institutional hedging has created a forced selling loop that may trigger more BTC capitulation.
- The study of these structured notes is crucial to understanding sharp volatility in either direction.
Arthur Hayes pointed to institutional dealer hedge strategies for the ongoing Bitcoin (BTC) price selloff. As Bitcoin price dropped below its crucial bull support bands, Hayes noted that institutional dealers were forced to sell Bitcoin to hedge against their positions in structured products such as BlackRock’s iShares Bitcoin Trust ETF (IBIT).
“BTC dump probably due to dealer hedging off the back of $IBIT structured products,” Hayes stated.
Hayes Correlates Bitcoin Dump to Institutional Hedge
According to Hayes, ongoing institutional hedge in their investments in structured products has created a forced selling loop for Bitcoin. He stated that institutional hedging is a game changer to Bitcoin trading since it offers critical supply and demand levels.
“As derivatives scale, BTC volatility is increasingly driven by Dealer Gamma hedging rather than retail sentiment. These ‘Trigger Points’ are the new support/resistance levels of the 2026 cycle,” @bbx_official stated.
Bitcoin price has dropped from its peak of above $126k to trade at about $68.6k on Saturday February 7, 2026. The flagship coin has been trapped in a macro falling trend despite the significant adoption from institutional investors and regulatory clarity in over a dozen jurisdictions.
The theory of institutional investors impacting Bitcoin has, however, been downplayed by some analysts. For instance, X user @chrisbackus5 replied to Hayes that the Bitcoin drop may be a result of the broader four-year cycle.
Moreover, Bitcoin’s four-year cycle has resulted in a multi-month bear market a year after the halving event. Nonetheless, the IBIT-linked structured notes, led by Morgan Stanley, reached a total of $353 million in total notional value by the end of 2025.
With more traditional banks involved in the Bitcoin market through the spot BTC exchange-traded funds, the total notional value of structured notes is likely to be much higher.
What’s Next?
As such, Hayes stated that he will compile a list of all issued notes by traditional banks to have a clear understanding of the Bitcoin price action. Moreover, Hayes believes that these notes will give Bitcoin traders a clear understanding of trigger points that could catalyze higher volatility in either direction.
The institutional influence on Bitcoin has exponentially increased in the past year. As such, the impacts of dealer hedging dynamics will continue to grow as more traditional banks get involved with the Bitcoin market.
Nevertheless, more Wall Street experts, led by Cathie Wood and Tom Lee, have attributed the ongoing Bitcoin selloff to the October 10, 2025 glitch, which wiped out more than $20 billion from the crypto industry.
Related: Why Stocks Are Rising While Crypto Consolidates in 2026
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