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:
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Analysts are pointing to Hong Kong hedge funds and ETF-linked U.S. financial institution merchandise as attainable drivers of BTC’s crash.
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Bitcoin may slip again under $60,000, placing the value nearer to miners’ break-even ranges.
Hong Kong hedge funds behind BTC dump?
One fashionable principle means that Bitcoin’s crash this previous week might have originated in Asia, the place some Hong Kong hedge funds have 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 accordance with Parker White, COO and CIO of Nasdaq-listed DeFi Growth Corp. (DFDV).
They swapped that yen into different currencies and invested in dangerous belongings like crypto, hoping costs would rise.
This was the best quantity day on $IBIT, ever, by an element of practically 2x, buying and selling $10.7B at the moment. Moreover, roughly $900M in choices premiums have been traded at the moment, additionally the best ever for IBIT. Given these information and the best way $BTC and $SOL traded down in lockstep at the moment (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 value drop.
Morgan Stanley triggered Bitcoin selloff: Arthur Hayes
One other principle gaining traction comes from former BitMEX CEO Arthur Hayes.
He prompt that banks, together with Morgan Stanley, might have been compelled to promote Bitcoin (or associated belongings) to hedge their publicity in structured notes tied to identify Bitcoin ETFs, akin to BlackRock’s IBIT.
These are advanced monetary merchandise the place banks supply purchasers bets on Bitcoin’s worth 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 compelled 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” might have additionally fueled the Bitcoin downtrend.
In a Saturday put up on X, analyst Choose Gibson mentioned that the rising AI knowledge heart demand is already forcing Bitcoin miners to pivot, which has led to a 10-40% drop in hash charge.
As an example, in December 2025, Bitcoin miner Riot Platforms introduced its shift towards a broader knowledge heart 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 destructive inversion that traditionally indicators acute miner revenue stress and raises the danger 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 may begin to expertise actual monetary stress.
Lengthy-term holders are additionally trying 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 quite than accumulating.
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