Bitcoin’s plunge to near $60,000 on Thursday, a nearly 30% drop over 7 days, led traders on
Flood, a prominent crypto trader, called it in an article the most vicious sell-off he had seen in years and said it seemed “forced” and “indiscriminate,” floating possibilities ranging from a sovereign dumping of billions to a blowout of the FX balance sheet.
Few theories: – Secret sovereign dumping of over $10 billion (Saudi Arabia/UAE/Russia/China) – Stock market explosion, or exchange that had tens of billions of dollars worth of Bitcoin on its balance sheet, forced to sell for some reason.
Franklin Bi, general partner of Pantera Capital, proposed a more detailed theory. He suggested that the seller could be a large player based in Asia with a limited number of crypto-native counterparties, meaning the market would not quickly “sniff” them.
My guess is that this is not a crypto-focused trading company, but a prominent person outside of crypto, probably based in Asia, with very few crypto-native counterparties. that’s why no one sniffed them on CT. comfortably operated and market-making on Binance –> Unwinding of the carry trade in JPY –> Liquidity crisis 10/10 –> ~ 90-day reprieve granted –> Attempt turned against him to resume the gold/silver trade –> Desperate outcome this week.
He said the chain of events may have started with leverage on Binance and then escalated as carry trades unraveled and liquidity evaporated, with a failed attempt to recoup losses on gold and silver accelerating the forced liquidation this week.
But the most unusual story emerging from the crash isn’t about leverage. It’s about security.
Capriole’s Charles Edwards argued that the price drop could finally draw attention to Bitcoin’s quantum security risks.
Edwards said he was “serious” when he warned last year that bitcoin might need to fall to prompt meaningful action, calling recent developments the first “promising progress” he had seen so far.
$50,000 isn’t that far away now. I was serious when I said last year that the price would have to come down to incentivize increased attention to Bitcoin’s quantum security. This is the first promising progress we have seen to date. I sincerely hope that Saylor seriously considers creating a well-funded Bitcoin security team.
He would have significant influence on the network to make changes. I fear that his statement today is a false flag, simply aimed at diminishing growing quantum fear without concrete action, but I wish it were false. We have a lot of work to do, and it must be done in 2026.
Parker White, COO and CIO at DeFi Development Corp., pointed to unusual activity in BlackRock’s bitcoin spot ETF (IBIT) as a possible culprit for Thursday’s disaster.
He noted that IBIT recorded its largest volume ever at $10.7 billion, as well as a record options premium of $900 million, arguing that the pattern corresponds to a large options-based liquidation rather than a typical crypto-native leverage unwind.
The last bit of evidence I have is that I personally know of a number of Hong Kong based hedge funds that hold $DFDV, which had the worst down day ever, with a significant drop in mNAV. The mNAV has held up surprisingly well throughout this decline until today. One of these funds could have been linked to the IBIT culprit, as I highly doubt that a fund taking such a large position in IBIT and using a single entity structure would only have one fund.
Now I could easily see how the fund(s) could have done a leveraged options trade on IBIT (think of how OTM calls = ultra high gamma) with borrowed capital in JPY. October 10 could very well have blown a hole in their balance sheet, which they tried to regain by adding leverage while waiting for the “obvious” rebound. As this led to increased losses, coupled with increased JPY funding costs, I could see how the fund(s) would have become more desperate and jumped into the silver trade. When that blew up, things got dire and this last surge in BTC finished them off.
“I have no hard evidence here, just some hunches and some bread crumbs, but it seems very plausible,” White wrote on X.
Bitcoin’s decline over the past week is due less to a slow decline and more to sudden air pockets, with sharp intraday swings replacing the orderly buying on the dips seen earlier this year.
The move brought BTC back towards levels last traded in late 2024, while liquidity appeared thin on major venues. As altcoins come under greater pressure and sentiment collapses on post-FTX-style readings, traders are now treating every rebound as suspicious until flows and positioning are visibly reset.
