Brevan Howard slashes Bitcoin ETF holdings, increases options exposure

YM Lee

Summary

Brevan Howard said it cut its holdings of BlackRock’s spot Bitcoin ETF IBIT by about 86%, reducing the value of its spot position from $2.4 billion to $275 million.
Brevan Howard said it shifted its Bitcoin exposure into derivatives, holding IBIT call options (about 8 million shares, more than $400 million) and put options (about 5 million shares, more than $248 million).
The market says the move is being read as a strategic reshuffle, as a narrower basis weakened the incentive to hold a spot ETF, with the use of options reflecting a focus on capital efficiency and risk-adjusted returns.

Global hedge fund Brevan Howard has sharply reduced its holdings of BlackRock’s spot Bitcoin exchange-traded fund while increasing its options positions.

According to Bloomberg on the 18th (local time), Brevan Howard Capital Management cut its stake in BlackRock’s iShares Bitcoin Trust (IBIT) by 31.2 million shares in the fourth quarter of last year. As a result, its holdings fell about 86%, to 5.5 million shares from 36.7 million. The value of its spot position shrank from about $2.4 billion to roughly $275 million.

Brevan Howard has not, however, fully exited its Bitcoin exposure. Instead, it has replaced a significant portion with derivatives. It currently holds call options linked to about 8 million IBIT shares, valued at more than $400 million. It also holds put options equivalent to about 5 million shares, worth more than $248 million.

The repositioning came alongside a pullback in Bitcoin prices. Bitcoin is down more than 40% from its peak, and during a sharp selloff last October, bullish bets totaling $19 billion were liquidated. Since then, U.S.-listed spot Bitcoin ETFs have seen net outflows of about $8.4 billion.

At their peak, U.S. spot Bitcoin ETFs had about $170 billion in total assets under management, but that has now declined to around $85.5 billion. IBIT, too, once managed $99.4 billion but now holds about $51.4 billion.

Market participants view the adjustment less as an outright risk-off move than as a strategic reshuffle. James Harris, CEO of Tesseract, said, "Brevan Howard likely used IBIT not for simple long-term holding but as part of an arbitrage strategy combining spot purchases with short futures," adding, "As the basis narrowed from double-digit levels in 2025 to around 3–4% recently, the incentive to hold large spot positions diminished, and the shift to options reflects a decision weighing capital efficiency and risk-adjusted returns."

Andy Martinez, CEO of Crypto Insight Group, also noted, "After the basis spread narrowed, using options rather than holding ETFs outright can be a more capital-efficient approach," adding that it is "consistent with the recent decline in open interest at the Chicago Mercantile Exchange."

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