Author: Azuma, Odaily Planet Daily

The market is sluggish, and investors are on high alert.

In the past week, the frequent large transfers of BTC and ETH from BlackRock to Coinbase have attracted much attention from investors. Many interpret these transfer activities as signals of a market dump and attempt to analyze short-term market trends based on these signals. But is this methodology really valid?

Odaily Note: BlackRock transferred a large amount of BTC and ETH to Coinbase again last night.

In the early hours of November 25, Evgeny Gaevoy, founder of market-making giant Wintermute, commented on this matter on X, stating: "These large transfers from BlackRock are actually a lagging indicator. The sell-off has already occurred in the ETF. On-chain transfers by market makers often reflect the same situation."

How should we interpret Evgeny's words? If the transfers are lagging, when does the actual sell-off occur?

First, it is important to clarify that the so-called large transfers from BlackRock refer to the cryptocurrency transfers from the reserve addresses of BlackRock's spot Bitcoin ETF (IBIT) and spot Ethereum ETF (ETHA) to the Coinbase Prime custody address.

According to Evgeny's subsequent responses to questions from netizens, this actually occurs when there is a net outflow from the ETF, and large market makers are engaged in market-making and hedging around the ETF.

Specifically, market makers buy shares from ETF sellers, then submit redemption requests to BlackRock to exchange ETF shares for BTC (which usually has a 1-day delay). There is no selling pressure in the subsequent steps because market makers have already completed the hedging (selling) operation when they purchased the ETF.

In other words, the actual selling pressure does not occur when retail investors see the on-chain transfers; it occurs when market makers are taking on the ETF sell orders (which is a buy for market makers) while simultaneously selling in the external market for hedging. Since the redemption process typically has a 1-day delay, the actual selling pressure may have occurred a day earlier.

Additionally, the above describes the market-making process during a net outflow from the ETF. Conversely, when there is a net inflow into the ETF, market makers will sell ETFs to buyers while buying cryptocurrencies (such as SOL, which is currently experiencing a net inflow) and sending them to the ETF issuer. Since there is no redemption time limit in this case, the lag time will be shorter, but there will still be some delay.

In summary, the so-called "large transfers from BlackRock" are merely a settlement step in the standard operational process of the ETF, and the selling pressure they represent generally occurs before the transfer, not after. Relevant data will also be presented more clearly and comprehensively in the daily monitoring of ETF inflows and outflows, eliminating the need to reinterpret it as an additional bearish signal, which could lead to unnecessary panic.

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