Bitwise Advisor Market Selloff Recap: Selling Pressure Primarily From Paper Hands and Non-Directional Trading, Not Long-Term Fund Outflows

On February 8, Bitwise advisor Jeff Park shared a retrospective on the recent market crash. First, Park clarified that a circulating claim—**“Nasdaq has removed IBIT options position limits, granting Wall Street unlimited leverage”**—is false. Both BlackRock’s IBIT and BITB have long maintained a standard position limit of 250,000 shares. The SEC’s corresponding filings only increased position limits for spot ETFs like FBTC and ARKB to 250,000 shares—matching IBIT and BITB’s limits—to ensure fair market competition. Last November, BlackRock’s IBIT sought to raise its limit from 250,000 to 1 million shares, but the application was rejected. On the crash’s cause, Park noted it was more likely spurred by risk unwinding in the traditional financial system and derivatives mechanics—**not** a fundamental shift in crypto or a single “black swan” event. That day, Bitcoin ETFs (especially IBIT) hit record trading volumes and options activity, with bearish trades clearly dominating options markets. Bitcoin dropped over 13% in two days; initially, markets expected heavy ETF outflows—but actual data showed net inflows. This suggests selling pressure stemmed primarily from “paper funds” and non-directional trades tied to hedging/market making—not long-term outflows. ETF net flow changes in the coming days will be a key metric to gauge new long-term demand.