Bitcoin (BTC) skilled on of the most important sell-offs over the previous month, sliding greater than 40% to succeed in 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:
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Analysts are pointing to Hong Kong hedge funds and ETF-linked U.S. financial institution merchandise as potential drivers of BTC’s crash.
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Bitcoin might slip again under $60,000, placing the worth nearer to miners’ break-even ranges.
Hong Kong hedge funds behind BTC dump?
One widespread concept means that Bitcoin’s crash this previous week could have originated in Asia, the place some Hong Kong hedge funds had been putting 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 response to Parker White, COO and CIO of Nasdaq-listed DeFi Improvement Corp. (DFDV).
They swapped that yen into different currencies and invested in dangerous belongings like crypto, hoping costs would rise.
This was the very best quantity day on $IBIT, ever, by an element of almost 2x, buying and selling $10.7B as we speak. Moreover, roughly $900M in choices premiums had been traded as we speak, additionally the very best ever for IBIT. Given these details and the way in which $BTC and $SOL traded down in lockstep as we speak (usually…
— Parker (@TheOtherParker_) February 6, 2026
When Bitcoin stopped going up, and yen borrowing prices elevated, these leveraged bets rapidly went dangerous. Lenders then demanded additional cash, forcing the funds to promote Bitcoin and different belongings rapidly, which exacerbated the worth drop.
Morgan Stanley precipitated Bitcoin selloff: Arthur Hayes
One other concept gaining traction comes from former BitMEX CEO Arthur Hayes.
He steered that banks, together with Morgan Stanley, could have been pressured to promote Bitcoin (or associated belongings) to hedge their publicity in structured notes tied to identify Bitcoin ETFs, similar to BlackRock’s IBIT.
These are complicated monetary merchandise the place banks supply purchasers bets on Bitcoin’s value efficiency (typically with principal safety or limitations).
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 “destructive gamma,” that means that as costs drop additional, hedging gross sales speed up, turning banks from liquidity suppliers into pressured sellers and exacerbating the downturn.
Miners shifting from Bitcoin to AI
Much less distinguished however circulating is the idea {that a} so-called “mining exodus” could have additionally fueled the Bitcoin downtrend.
In a Saturday submit on X, analyst Decide 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 charge.
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 check hits steadiness 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 destructive inversion that traditionally indicators acute miner revenue 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 online 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 reveals wallets holding 10 to 10,000 BTC now management their smallest share of provide in 9 months, suggesting this group has been trimming publicity reasonably than accumulating.
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