**BlackRock's iShares Bitcoin Trust ETF (IBIT)** experienced unusual trading activity during a sharp Bitcoin sell-off on Thursday. The fund dropped as investors rushed to hedge risk in the options market, but IBIT shares rebounded strongly on Friday as Bitcoin recovered.

Following the volatility, traders began watching options activity tied to the ETF, not just inflows and outflows, to better understand how large investors were positioning in Bitcoin.

## Record Hedging Activity Emerges

**Options volume linked to IBIT jumped to about 2.33 million contracts on Thursday**, the highest on record. Traders paid roughly $900 million in premiums, with put options slightly exceeding call options. Because puts are commonly used for downside protection, the data suggests investors were guarding against further declines as Bitcoin briefly dropped toward the $60,000 level.

The spike suggests large investors were hedging their positions rather than simply selling shares. Because IBIT is a key way institutions gain Bitcoin exposure, activity in its options market can hint at how they are positioning.

Some traders linked the surge to a leveraged fund under margin pressure, while others said it looked like normal hedging during a sharp drop. In any case, the move shows IBIT options are becoming another signal investors watch alongside ETF inflows to gauge demand for Bitcoin.

## What TipRanks Data Shows

According to TipRanks data, **IBIT recently traded around $39.68 after a nearly 10% daily gain**, with assets under management of about $58.2 billion and an expense ratio of 0.25%.

Despite the short-term rebound, the ETF remains down 31% over the past month and 34% in 2025, reflecting how closely its performance follows Bitcoin’s volatility.

![IBIT ETF Chart](https://blog.tipranks.com/wp-content/uploads/2026/02/image-860.png)

BlackRock’s ($BLK) iShares Bitcoin Trust ETF ($IBIT) drew unusual trading activity during Thursday’s sharp Bitcoin sell-off. The fund dropped in that session as inv...

BlackRock's Bitcoin ETF Sees Record Options Trading as Investors Rush to Hedge Amid Sell-Off

## The Rise of World Liberty Financial's USD1

World Liberty Financial, the Trump family's cryptocurrency startup, recently achieved a major milestone: its signature digital coin, **USD1**, reached a total circulation of **$5 billion**, cementing its place among the world's top cryptocurrencies. The company celebrated this achievement on social media, with Eric Trump marking the moment with fire emojis.

Much of this success can be attributed to an alliance with **Binance**, the world's largest cryptocurrency exchange. This relationship has become particularly significant since President Trump pardoned Binance's founder, **Changpeng Zhao**, in October 2025.

![Binance has offered a series of marketing promotions to encourage its customers to buy World Liberty Financial's stablecoin.](https://static01.nyt.com/images/2026/02/05/us/politics/dc-crypto-trump/dc-crypto-trump-articleLarge.jpg?quality=75&auto=webp&disable=upscale)

*Credit: Marco Bello/Reuters*

## Binance's Crucial Role

As the primary trading platform for USD1, Binance has become a vital engine for the Trump family's crypto business. Approximately **85% of the $5 billion USD1 coins in circulation** are held in accounts on Binance, according to data firms Arkham and Nansen. This dominance persists even though Binance's platform is only available outside the United States.

Jonathan Reiter, co-founder of crypto data firm ChainArgos, noted: "Most of the money is sitting within Binance, and has really always sat within Binance. They are the main trading venue for this."

## Controversial Connections

The relationship between World Liberty and Binance has faced **heavy scrutiny from ethics experts and members of Congress**, who view it as a significant conflict of interest. President Trump now serves as both a crypto mogul and the industry's chief policy maker, creating potential ethical concerns.

The White House has voiced support for legislation that would make it easier for crypto exchanges to operate in the United States, while simultaneously overseeing a family business that benefits from such policies.

![President Trump in October granted a pardon to Changpeng Zhao, Binance's founder, who spent four months in prison for money-laundering violations.](https://static01.nyt.com/images/2026/02/05/multimedia/dc-trump-crypto-pkvq/dc-trump-crypto-pkvq-articleLarge.jpg?quality=75&auto=webp&disable=upscale)

*Credit: Tamir Kalifa for The New York Times*

## Strategic Promotions and Incentives

Since the pardon, Binance has implemented several strategic promotions to boost USD1 adoption:

- **Fee-free conversions**: In December, Binance announced customers could convert other firms' stablecoins to USD1 without paying fees
- **Interest programs**: The exchange offered customers the chance to earn interest on USD1 holdings
- **$40 million rewards pool**: In January, Binance launched a promotion offering rewards to customers who held USD1

These incentives proved remarkably effective. Over one week following the $40 million rewards announcement, the amount of USD1 traded worldwide **shot up by nearly $2 billion**.

## The Stablecoin Business Model

Stablecoins represent a highly profitable sector of the crypto industry. Issuers like World Liberty accept deposits from traders, provide coins in return, and then invest the deposits to generate yield. According to financial reports, World Liberty has invested most of its deposits in government money-market funds, generating an annual return of about **4%**—potentially **$200 million in revenue** on $5 billion in deposits.

## Political and Regulatory Implications

The Trump administration has orchestrated a complete overhaul of the government's approach to cryptocurrency, ending a regulatory crackdown that began during Trump's first administration. At the same time, the Trump family has built a sprawling network of crypto businesses, with World Liberty at the center of this empire.

![Mr. Trump's two elder sons, Donald Trump Jr. and Eric Trump, are business partners in World Liberty Financial with Zach Witkoff, the son of Mr. Trump's Middle East envoy, Steve Witkoff.](https://static01.nyt.com/images/2026/02/05/multimedia/dc-trump-crypto-4-lgjk/dc-trump-crypto-4-lgjk-articleLarge.jpg?quality=75&auto=webp&disable=upscale)

*Credit: Spencer Platt/Getty Images*

## Legislative Challenges and Loopholes

The GENIUS Act, signed by President Trump last year, created industry-friendly rules for stablecoins but prohibited issuers from offering interest to customers. However, the legislation left a workaround: while issuers cannot offer interest, exchanges can—creating potential for similar incentives on U.S. platforms.

Congress is now considering broader crypto regulation, with banking lobbyists pushing to close this loophole. The White House has convened meetings between banking and crypto representatives to negotiate compromises.

## Defense and Denials

A spokesman for World Liberty stated that promotional incentives were funded by the Trump crypto company, not Binance, calling this arrangement "standard practice" for stablecoin issuers. A Binance spokeswoman emphasized that "it is not uncommon for large exchanges to hold large amounts of certain tokens" and that Binance offers promotions for a wide range of coins.

A lawyer for Changpeng Zhao asserted that "there are no conflicts of interest or quid pro quos," while a White House spokeswoman maintained that Mr. Trump's assets are in a trust managed by his children and that "there are no conflicts of interest."

## The Future of Crypto Politics

As the debate continues in Congress, the relationship between Binance and World Liberty Financial highlights the complex intersection of cryptocurrency, politics, and regulation. With President Trump having "direct skin in the game because of World Liberty and USD1," according to crypto expert Lee Reiners of Duke University, the outcome of these policy discussions could have significant implications for both the Trump family's business interests and the broader crypto industry.

Ties between the exchange and the president’s company, World Liberty Financial, have only strengthened since the president pardoned Binance’s founder, Changpeng Zhao.

Trump's Crypto Empire: How Binance's Pardon Fueled a $5 Billion Stablecoin Boom

Crypto prices got absolutely rocked this week with Bitcoin falling nearly $15,000 in 24 hours—a bloodbath not seen since the collapse of crypto conman Sam Bankman-Fried’s empire back in 2022. On Friday, Bitcoin had clawed back most of those losses, and is now trading around $70,000, but the episode has left even longtime crypto insiders asking each other “What just happened?!” There are plenty of theories swirling around, but one is particularly compelling: The cause of the crash lies with Hong Kong traders who placed high-leverage Bitcoin bets that went horribly wrong.

That theory was put forth on X by Parker White, a former equities trader who is now COO at a crypto firm called DeFi Development Corporation. In a long thread, White said there is evidence pointing to the sudden implosion of Hong Kong hedge funds that held call options in BlackRock’s IBIT, which is the world’s biggest Bitcoin ETF.

White suggests that the hedge funds used the Yen carry trade (a form of interest arbitrage) to finance big positions in out-of-the-money IBIT options. This amounted to a risky bet that Bitcoin prices, which have been slumping since a big sell-off in October, would recover. The hoped-for rally didn’t arrive, however. Meanwhile, White speculates that the Hong Kong funds also got pummeled by headwinds in the Yen-carry trade—which made their financing more expensive—and exposure to recent convulsions in the silver market.

The upshot is the hedge funds faced a perfect storm and, as the crypto market slumped further this week, the value of their holdings declined until they got liquidated—forcing the mass sell-off of IBIT shares and a calamitous fall for Bitcoin. Here is how White explained what happened in trader-speak:

*Now, I could easily see how the fund(s) could have been running a levered options trade on IBIT (think way OTM calls = ultra high gamma) with borrowed capital in JPY. Oct 10th could very well have blown a hole in their balance sheet, that they tried to win back by adding leverage waiting for the “obvious” rebound. As that led to increased losses, coupled with increased funding costs in JPY, I could see how the fund(s) would have gotten more desperate and hopped on the Silver trade. When that blew up, things got dire and this last push in BTC finished them off.*

In his post, White also pointed out that the Hong Kong hedge funds, whose Bitcoin trading occurred only in the form of ETF shares, are not part of the traditional crypto ecosystem. This means that chatter about their predicament did not bubble up on “Crypto Twitter”—which is the go-to forum for industry news—and nor did it create counter-parties who incurred big losses, and would be likely to warn others.

White’s theory is just that, of course: no more than a theory. Meanwhile, history shows that major Bitcoin crashes have typically been touched off by multiple factors, not a single event. And indeed, this week’s crypto crackup coincided with a broader AI-related asset sell-off, uncertainty over the fate of a key blockchain bill, as well as crypto names appearing in the Epstein files—factors that all likely contributed to Thursday’s meltdown.

Still, White’s explanation is the most persuasive, and is further supported by other circumstantial evidence, including a recent decision by the Securities and Exchange Commission to lift limits on trading Bitcoin options.

Meanwhile, other longtime crypto figures expressed cautious support for the Hong Kong hedge fund theory. That included the respected venture capitalist Haseeb Qureshi who described the theory as plausible, but added that it may take months to wait for regulatory filings that could help confirm it, and that in some cases a key crypto player can “blow up” without anyone ever learning their identity. But for those who are confident that a hedge fund is at the root of this week’s market troubles, there is already a Polymarket forum to bet on the culprit.

What caused the massive Bitcoin crash? Clues point to a blow-up at Hong Kong hedge funds

The Hidden Culprit Behind Bitcoin's Epic Crash: Hong Kong Hedge Funds' Risky Bets Unraveled

XRP has plummeted over **50% from its peak**, but a lower price tag isn't enough to make it a buy. Here's what needs to happen before considering this cryptocurrency again.

Back in 2024, **XRP** looked like a promising investment. Ripple Labs was nearing the end of its long legal battles, and election results hinted at a more crypto-friendly administration. At that time, XRP traded at just **$0.70 per coin**, with a market value of **$41 billion**.

Things shifted dramatically. XRP skyrocketed, hitting **$2.70 by December 2** and **$3.30 in mid-January 2025**. At its peak, with a market value of **$182 billion**, only **Bitcoin** and **Ethereum** had a larger footprint.

![XRP Stock Quote](https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Fart%2Fcompanylogos%2Fmark%2FXRP.png&w=128&op=resize)

That surge was **too much, too fast**. XRP was priced for perfection, leaving little room for gains and a steep downside. The coin was no longer a top choice.

The price chart has been diving since July, largely due to **macroeconomic uncertainty**. While this downturn affects most of the crypto market, XRP took a **deeper six-month dive** than Ethereum or Bitcoin. It's down more than 50% from the peak, and valuation isn't the main barrier anymore.

Overall, XRP has roughly doubled from 2024's election week, which seems appropriate given the lawsuit resolution. But I'm still not buying XRP until people and financial institutions actually start to use it.

## Show Me the Money (Moving Through XRP)

**XRP was designed to facilitate cross-border payments**. Ripple Labs pitched it as a faster, cheaper alternative to the **SWIFT network** used by banks today. The idea is compelling: international wire transfers can take days and cost a fortune in fees, while XRP transactions settle in seconds and cost fractions of a penny.

![Gold coins with the Ripple logo and high-denomination dollar bills.](https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F848142%2Fripple-and-cash.jpg&w=3840&op=resize)

So XRP sounds great on paper. In practice, Ripple has announced dozens of partnerships with banks and payment providers over the years. Most of these pilots never scaled into meaningful transaction volume. The company doesn't disclose how much XRP actually flows through its **On-Demand Liquidity (ODL) service**, leaving investors to rely on vague press releases.

I've been waiting for clear signs. Here's what would make me stop and possibly invest:

- **Transparent volume data**: Ripple publishing regular, audited reports on ODL transaction volume would help. Show me the receipts, please.
- **A big bank goes on the record**: Not a pilot or a vague partnership. I want a top-20 global bank stating, "We move billions of dollars with XRP."
- **Some defense against the competition**: **Stablecoins** and **central bank digital currencies (CBDCs)** are targeting the same cross-border payments market. XRP needs a reason to win beyond being first.

Without these signals, XRP remains a bet on potential rather than performance. Ripple has been making the same pitch for nearly a decade. I'd like to see it land before buying. Lower coin prices are a start, but serious real-world progress is essential.

XRP has dropped more than 50% from its peak, but I want more than just a lower price tag. Here's what needs to happen before I'd consider buying this cryptocurrency again.

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