Bitcoin (BTC) skilled on of the most important 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 doable drivers of BTC’s crash.
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Bitcoin might slip again beneath $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 could 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 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 property like crypto, hoping costs would rise.
This was the best quantity day on $IBIT, ever, by an element of almost 2x, buying and selling $10.7B right now. Moreover, roughly $900M in choices premiums have been traded right now, additionally the best ever for IBIT. Given these details and the best way $BTC and $SOL traded down in lockstep right now (usually…
— Parker (@TheOtherParker_) February 6, 2026
When Bitcoin stopped going up, and yen borrowing prices elevated, these leveraged bets rapidly went unhealthy. Lenders then demanded extra cash, forcing the funds to promote Bitcoin and different property rapidly, which exacerbated the value drop.
Morgan Stanley induced Bitcoin selloff: Arthur Hayes
One other principle 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, similar to BlackRock’s IBIT.
These are complicated monetary merchandise the place banks provide purchasers bets on Bitcoin’s value efficiency (usually with principal safety or boundaries).
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 “damaging 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” could have additionally fueled the Bitcoin downtrend.
In a Saturday publish on X, analyst Choose Gibson stated that the rising AI information middle demand is already forcing Bitcoin miners to pivot, which has led to a 10-40% drop in hash fee.
As an example, in December 2025, Bitcoin miner Riot Platforms introduced its shift towards a broader information middle technique, whereas promoting $161 million value of BTC. Final week, one other miner, IREN, introduced its pivot to AI information facilities.
Associated: Crypto’s stress check 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 beneath the 60-day, a damaging inversion that traditionally indicators acute miner earnings stress and raises the chance of capitulation.
As of Saturday, the estimated common electrical energy value to mine a single Bitcoin was round $58,160, whereas the web manufacturing expenditure was roughly $72,700.
If Bitcoin drops again beneath $60,000, miners might begin to expertise actual monetary stress.
Lengthy-term holders are additionally trying extra cautious.
Knowledge 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 slightly than accumulating.
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