A significant disruption in BlackRock’s IBIT options market indicates that the Bitcoin crash on February 5 was largely driven by derivatives rather than typical market forces.
Several clues point towards a particular hedge fund based in Hong Kong as being at the center of this event.
New findings suggest that a sophisticated counterparty executed a strategy reminiscent of the ‘Big Short,’ profiting from Bitcoin’s decline.
The plunge in Bitcoin prices on February 5 wasn’t just an ordinary sell-off. Something unusual occurred, and most participants in the crypto space were looking for answers in the wrong places.
Parker White, Chief Investment Officer at DeFi Development Corp, provided an insightful analysis during his appearance on Laura Shin’s Unchained podcast. His explanation has since gained widespread attention across crypto communities.
White argues that a hedge fund collapse within BlackRock’s IBIT options segment has been exerting downward pressure on Bitcoin since October last year.
The February 5 Drop Was Not Typical
On that day, Bitcoin’s price fell sharply from approximately $70,000 to $63,000. Simultaneously, trading volume for BlackRock’s IBIT ETF surged to record highs.
Interestingly though, spot trading volumes and perpetual swap activities remained relatively stable. The volatility spike was isolated to short-term implied volatility within IBIT options markets. According to White, this signals an options-driven breakdown rather than widespread spot selling pressure.
A Hedge Fund Based In Hong Kong Got Caught
The core of White’s theory involves a non-crypto-focused hedge fund located in Hong Kong which had been betting against Bitcoin volatility through positions in IBIT options. When implied volatility spiked dramatically around October 10th due to market movements, this fund suffered substantial losses but chose to increase its exposure instead of reducing risk.
This decision likely backfired when large investor redemption requests—subjected to Hong Kong’s mandatory 90-day settlement period—forced complete liquidation by early February.
“After consulting with multiple sources,” White stated earlier,“I am increasingly convinced that a major holder of IBIT based out of Hong Kong experienced a blowup.”
“After talking with several people I’m now quite certain an HK-based fund holding large amounts of IBIT collapsed.
This is moving beyond hypothesis into strong theory.” https://t.co/67XxlwZEGm
— Parker (@TheOtherParker_) February 8, 2026
An Executed ‘Big Short’ Strategy Against Bitcoin
While some traders who sold volatility faced heavy losses during these events, White believes another entity quietly accumulated put options starting around July when market volatility was near historic lows — effectively setting up for gains if prices dropped sharply later on.
The tactic involved pushing down bitcoin prices during periods with low liquidity (such as weekends). Once markets reopened Monday morning after these declines occurred overnight or over weekends without much resistance from buyers or sellers—the dealers responsible for hedging their overnight option exposures were forced into selling more bitcoin futures or spot assets — further accelerating downward momentum through feedback loops triggered by hedging demands among intermediaries involved with those derivative products .
“Make no mistake: there is actually mention circulating about someone becoming billionaire-level wealthier recently thanks largely due their bearish crypto trades,” White remarked emphatically.
The Road Ahead
Securities filings known as Form 13F are expected by May 15; these will reveal whether any prominent holders among concentrated investors linked specifically with Hong Kong-based funds have exited their positions significantly—a potential smoking gun confirming suspicions behind this chain reaction impacting bitcoin pricing dynamics over recent months .
Till then , while still unconfirmed officially , accumulating evidence supporting Parker Whites’ narrative makes it difficult not consider his interpretation seriously .
If you want further insights : check out Grayscale’s latest recommendations highlighting top cryptocurrencies poised for recovery following BTC’s dramatic ~50% correction including ETH , SOL , LINK among others .