(Bloomberg) — Brevan Howard Capital Management has overhauled its position in BlackRock’s iShares Bitcoin Trust, becoming the largest seller of the spot ETF in the fourth quarter as Bitcoin’s rally unraveled.
US regulatory filings through Feb. 17 show the hedge fund cut its IBIT holdings by 31.2 million shares from the previous quarter. Its stake fell about 86% to 5.5 million shares from 36.7 million, reducing the value of its spot position to roughly $275 million from about $2.4 billion, according to data compiled by Bloomberg.
Brevan Howard declined to comment.
But the firm hasn’t completely exited the trade. Instead, it replaced much of its direct exposure with derivatives. Brevan now holds call options tied to roughly 8 million IBIT shares valued at more than $400 million, as well as put options linked to about 5 million shares worth over $248 million, according to filings.
Earlier Wednesday, the Financial Times reported that Brevan Howard’s BH Digital Asset fund slumped about 30% in 2025, its worst annual decline since its launch in 2021, citing people familiar with the fund’s performance. Bitcoin, which accounts for about half the crypto market’s total value, ended down 6.5% last year following a fourth-quarter rout.
“Brevan Howard wasn’t sitting on IBIT as a long-only bet — it was likely the long leg of a cash-and-carry trade. With basis now closer to 3–4% instead of the double-digit levels we saw in 2025, the economics no longer justify warehousing spot. Moving into options is about capital efficiency and better risk-adjusted returns, not a change in view on of the asset class,” said James Harris, chief executive officer of digital asset. management firm Tesseract.
Hedge funds have long sought to profit from the difference with the so-called basis trade, whereby they buy Bitcoin in the spot market or proxies such as IBIT and sell long-dated futures to lock in the discrepancy between the two prices while sentiment remained bullish.
The repositioning comes after a bruising stretch for digital assets. Bitcoin has dropped more than 40% from its peak, even as stocks and precious metals have found buyers. Since the Oct. 10 crypto market crash, when $19 billion of bullish bets were liquidated, about $8.4 billion has flowed out of US-listed spot Bitcoin exchange-traded funds.
At their peak, the funds managed nearly $170 billion in assets. That figure has since fallen to about $85.5 billion. BlackRock’s IBIT absorbed the bulk of those flows on the way up. The fund once oversaw $99.4 billion and now holds about $51.4 billion.
Many ETF investors are also sitting below their average cost basis. That dynamic has capped rebounds, as rallies are met with selling from holders seeking to break even rather than chase momentum.
At the same time, options tied to IBIT have rapidly grown into a key venue for trading Bitcoin volatility. Notional open interest in IBIT options stands at about $30.2 billion, slightly exceeding that on Deribit, the largest crypto-native options exchange.
Brevan Howard’s restructuring reflects that change in market structure. Instead of holding large blocks of ETF shares, sophisticated investors are increasingly using options to manage risk and express views, market observers say.
“Shifting from outright ETF ownership to options can be a more capital-efficient way to maintain exposure, particularly after basis spreads compress,” said Andy Martinez, chief executive of Crypto Insights Group. “Given the decline in CME open interest, this looks consistent with trade restructuring rather than a broader de-risking.”
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