Bitcoin experienced a dramatic fall to nearly $60,000 on Thursday, marking an almost 30% decline within just seven days. This sharp downturn has led traders on X to speculate that the selloff was driven by more than just macroeconomic factors or risk aversion. Instead, multiple elements seem to have combined, resulting in Bitcoin’s worst single-day drop since the FTX collapse in 2022.
A well-known crypto trader named Flood described this as the most intense selling pressure he has witnessed in years. He characterized it as “forced” and “indiscriminate,” suggesting various possibilities such as a sovereign entity offloading billions of dollars or an exchange facing a severe balance sheet crisis.
Some hypotheses include: – A secret sovereign dumping over $10 billion (potentially Saudi Arabia, UAE, Russia, or China) – An exchange meltdown or an exchange holding tens of billions worth of Bitcoin forced into liquidation for some reason.
Franklin Bi, general partner at Pantera Capital, provided a more nuanced theory. He proposed that the seller might be a large-scale player based in Asia with few crypto-native counterparties—meaning their actions wouldn’t be quickly detected by market participants.
My speculation is that this isn’t a typical crypto trading firm but rather someone substantial outside the crypto ecosystem from Asia with limited native counterparts. That explains why no one identified them on Crypto Twitter early on. They were comfortably leveraged and engaged in market-making activities on Binance —> then came the unwind of JPY carry trades —> followed by a severe liquidity crisis lasting about 90 days —> attempts to recover losses through gold/silver trades backfired —> culminating in desperate liquidations this week.
According to Bi’s view, these events began with leverage exposure at Binance and worsened due to unwinding carry trades and evaporating liquidity. The failed recovery efforts via precious metals accelerated forced selling during this recent period.
A different angle emerging from this crash focuses not on leverage but security concerns surrounding Bitcoin itself.
Charles Edwards from Capriole highlighted that declining prices might finally push serious attention toward Bitcoin’s vulnerabilities related to quantum computing threats.
Edwards emphasized his previous warnings last year about price needing to fall further before meaningful action would be taken regarding quantum security risks—and noted recent developments represent promising initial progress toward addressing these issues.
$50K is now within reach again. I was serious when I said last year that prices needed to drop lower for proper focus on Bitcoin’s quantum security challenges. What we’re seeing now is encouraging progress so far—I genuinely hope Michael Saylor commits seriously towards building a well-funded team dedicated solely to securing Bitcoin against quantum threats.
Saylor could wield significant influence across the network if committed properly. However, I worry today’s statements may simply serve as false reassurance aimed at downplaying growing fears without real action—but I hope I’m wrong because there remains much work ahead which must happen by 2026.
Parker White—COO and CIO at DeFi Development Corp.—pointed out unusual activity linked with BlackRock’s spot bitcoin ETF (IBIT) as another potential factor behind Thursday’s sharp selloff.
He observed IBIT recorded its highest-ever daily volume reaching $10.7 billion alongside unprecedented options premiums totaling $900 million—patterns indicative of large options-driven liquidations rather than standard cryptocurrency leverage unwinds typically seen among native traders.
The final clue comes from my knowledge of several Hong Kong-based hedge funds holding shares in $DFDV—which suffered its worst single-day loss ever along with significant declines in managed NAVs (mNAV). These funds could possibly connect back somehow with IBIT-related positions since it seems unlikely one fund alone would take such massive exposure using only one entity structure without others involved too.
I can easily imagine these funds running leveraged options strategies tied heavily into IBIT (e.g., deep out-of-the-money calls implying extremely high gamma), financed through borrowed Japanese yen capital.
October 10th likely inflicted major damage upon their balance sheets prompting attempts at recovery via increased leverage while awaiting what they expected would be an obvious rebound.
As losses mounted alongside rising funding costs denominated in JPY they became increasingly desperate resorting next onto silver trades—which also collapsed leading finally into last week’s brutal BTC selloff finishing them off completely.”
“While lacking concrete proof,” White admitted “these hunches align plausibly given observed market behavior.”
This past week’s plunge wasn’t characterized by gradual erosion but instead featured sudden steep drops creating volatile intraday swings replacing earlier orderly dip-buying patterns seen earlier throughout 2024.
The correction dragged $BTC back near levels not seen since late last year amid thin liquidity conditions across major exchanges.
Altcoins endured even heavier pressure while sentiment deteriorated sharply reaching lows reminiscent of post-FTX collapse periods.
Todays’ traders are treating every bounce cautiously until clearer signs emerge showing normalized flows and repositioning across markets.