Bitcoin (BTC) skilled on of the largest sell-offs over the previous month, sliding greater than 40% to achieve a year-to-date low of $59,930 on Friday. It’s now down over 50% from its October 2025 all-time excessive close to $126,200.
Key takeaways:
Analysts are pointing to Hong Kong hedge funds and ETF-linked U.S. financial institution merchandise as doable drivers of BTC’s crash.
Bitcoin might slip again under $60,000, placing the value nearer to miners’ break-even ranges.
Hong Kong hedge funds behind BTC dump?
One in style concept means that Bitcoin’s crash this previous week could have originated in Asia, the place some Hong Kong hedge funds had been inserting substantial, leveraged bets that BTC would proceed to rise.
These funds used choices linked to Bitcoin ETFs like BlackRock’s IBIT and paid for these bets by borrowing low-cost Japanese yen, in keeping with Parker White, COO and CIO of Nasdaq-listed DeFi Growth Corp. (DFDV).
They swapped that yen into different currencies and invested in dangerous property like crypto, hoping costs would rise.
This was the very best quantity day on $IBIT, ever, by an element of practically 2x, buying and selling $10.7B right this moment. Moreover, roughly $900M in choices premiums had been traded right this moment, additionally the very best ever for IBIT. Given these information and the way in which $BTC and $SOL traded down in lockstep right this moment (usually…
— Parker (@TheOtherParker_) February 6, 2026
When Bitcoin stopped going up, and yen borrowing prices elevated, these leveraged bets shortly went unhealthy. Lenders then demanded extra cash, forcing the funds to promote Bitcoin and different property shortly, which exacerbated the value drop.
Morgan Stanley precipitated Bitcoin selloff: Arthur Hayes
One other concept gaining traction comes from former BitMEX CEO Arthur Hayes.
He urged that banks, together with Morgan Stanley, could have been compelled to promote Bitcoin (or associated property) to hedge their publicity in structured notes tied to identify Bitcoin ETFs, resembling BlackRock’s IBIT.
These are advanced monetary merchandise the place banks provide shoppers bets on Bitcoin’s value efficiency (typically with principal safety or obstacles).
When Bitcoin falls sharply, breaching key ranges like round $78,700 in a single famous Morgan Stanley product, sellers should delta-hedge by promoting underlying BTC or futures.
This creates “unfavorable gamma,” which means that as costs drop additional, hedging gross sales speed up, turning banks from liquidity suppliers into compelled sellers and exacerbating the downturn.
Miners shifting from Bitcoin to AI
Much less outstanding however circulating is the speculation {that a} so-called “mining exodus” could have additionally fueled the Bitcoin downtrend.
In a Saturday submit on X, analyst Choose Gibson mentioned that the rising AI knowledge middle demand is already forcing Bitcoin miners to pivot, which has led to a 10-40% drop in hash price.
For example, in December 2025, Bitcoin miner Riot Platforms introduced its shift towards a broader knowledge middle technique, whereas promoting $161 million price of BTC. Final week, one other miner, IREN, introduced its pivot to AI knowledge facilities.
Associated: Crypto’s stress take a look at hits stability sheets as Bitcoin, Ether collapse
In the meantime, the Hash Ribbons indicator additionally flashed a warning: the 30-day hash-rate common has slipped under the 60-day, a unfavorable inversion that traditionally indicators acute miner earnings stress and raises the chance of capitulation.
As of Saturday, the estimated common electrical energy price to mine a single Bitcoin was round $58,160, whereas the web manufacturing expenditure was roughly $72,700.
If Bitcoin drops again under $60,000, miners might begin to expertise actual monetary stress.
Lengthy-term holders are additionally wanting extra cautious.
Information exhibits wallets holding 10 to 10,000 BTC now management their smallest share of provide in 9 months, suggesting this group has been trimming publicity fairly than accumulating.
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