Bitcoin slumped shortly after a large sell order in BlackRock's spot bitcoin exchange-traded fund.

Cointelegraph, a blockchain media outlet, reported on Tuesday that an unidentified trader sold 29.2 million shares of BlackRock's spot bitcoin ETF, iShares Bitcoin Trust (IBIT), in a single dark-pool block. Bitcoin then fell sharply in a short period.

The trade was worth about $1.3 billion. The transaction took place on Tuesday afternoon in UTC time. The dark pool is a trading platform where institutional investors process large orders privately to reduce market impact. Bitcoin fell from $77,875 to $76,720 in about 10 minutes after the trade, according to TradingView data. It stayed weak and dropped to $75,600, the 24-hour low. The daily decline was about 2.8 percent.

The market is taking the trade as a symbolic event showing the recent weak trend in bitcoin. Alex Thorn (알렉스 손), head of firmwide research at Galaxy Digital, called it one of the largest dark-pool trades he has seen. Bloomberg ETF analyst Eric Balchunas said the sold shares traded at $43.16 each, and that the order was more than 22 times larger than the second-largest IBIT sell order that day.

Bitcoin has long been seen as an asset that moves relatively independently from traditional financial markets. But analysis suggests that its linkage with U.S. stocks has been growing recently as institutional inflows expanded after approval of U.S. spot bitcoin ETFs. As the ETF market grows, large institutional trading is increasingly seen as having a direct effect on bitcoin's spot price.

ETF fund flows are also weak. U.S. spot bitcoin ETFs recorded net outflows for eight straight trading sessions through that day. Total outflows on Tuesday were $333.6 million, including $192.4 million from IBIT alone. Since the last net inflow on May 14, total outflows from the overall ETF market have exceeded $2.0 billion.

Institutional investors are also continuing to cut positions. Jane Street reduced its bitcoin ETF holdings by about 70 percent in the first quarter, and Goldman Sachs has also been reported to have cut its bitcoin ETF exposure by about 10 percent. The market is seeing signs of noticeably weakening institutional sentiment as withdrawals of existing funds accelerate faster than new inflows.

The large IBIT sale is being read as a signal of shifting institutional supply and demand rather than a single isolated trade. As the share of bitcoin investing through spot ETFs has grown, ETF inflows and outflows and large institutional orders are increasingly likely to remain key variables in short-term bitcoin price swings. With the ETF market emerging as a main liquidity channel for bitcoin, changes in traditional market investor sentiment are also expected to spread more quickly across the broader crypto market.