Bitcoin’s plunge to nearly $60,000 on Thursday, down nearly 30% over 7 days, has led traders on X to begin floating theories that the sell-off was not purely macro or risk-off, but various reasons contributed to the asset’s worst one-day performance since the 2022 FTX crash.
Flood, a prominent crypto trader, called it in an X post the most vicious selloff he’s seen in years, saying it felt “forced” and “arbitrary,” floating possibilities ranging from a sovereign dumping of billions to an explosion of the currency balance sheet.
Few theories: – Secret Sovereign dumping $10B+ (Saudi/UAE/Russia/China) – Exchange blowup, or Exchange that had tens of billions of dollars of Bitcoin on balance forced to sell for some reason.
Pantera Capital general partner Franklin Bi offered a more detailed theory. He suggested the seller could be a large Asia-based player with limited crypto-native counterparts, meaning the market would not “sniff them out” quickly.
My guess is that it’s not a crypto-focused trading firm, but someone big outside of crypto, probably based in Asia, with very few crypto-native counterparts. therefore no one has sniffed them out on CT. comfortably leveraged and market making on Binance –> JPY carry trade unwind –> 10/10 liquidity crunch –> ~90 day reprieve granted –> setback attempt to recover on gold/silver trade –> desperate relaxation this week.
In his view, the chain of events may have started with leverage on Binance, then worsened as carry trades settled and liquidity evaporated, with a failed attempt to recoup losses in gold and silver accelerating the forced liquidation this week.
But the more unusual narrative emerging from the crash isn’t about leverage. It’s about safety.
Charles Edwards of Capriole argued that falling prices may finally force serious attention to bitcoin’s quantum security risks.
Edwards said he was “serious” when he warned last year that bitcoin might have to go lower to encourage meaningful action, and called the latest development the first “promising progress” he’s seen so far.
$50K not too far away now. I was serious when I said last year that the price needed to come down to encourage proper attention to Bitcoin quantum security. This is the first promising progress we have seen to date. I really hope Saylor is serious about establishing a well-funded Bitcoin Security team.
He would have significant influence across the network in effecting change. I am concerned that his statement today is a false flag, to simply reduce growing quantum fears without concrete action, but I would love for this to be wrong. We have a lot of work to do and it must be done in 2026.
Parker White, COO and CIO of DeFi Development Corp., pointed to unusual activity in BlackRock’s spot bitcoin ETF (IBIT) as a possible culprit behind Thursday’s washout.
He noted that IBIT posted its biggest day of volume ever at $10.7 billion along with a record $900 million in options premium, arguing that the pattern fits a large option-driven liquidation rather than typical crypto-native leverage.
The last bit of evidence I have is that I personally know a number of HK based hedge funds that are holders of $DFDV that had the worst single down day ever, with a meaningful mNAV decline. The mNAV had held surprisingly well throughout this pullback until today. One of these funds could have been linked to the IBIT culprit, as I highly doubt that a fund that takes such a large position in IBIT and uses a single entity structure would only have that one fund.
Now I could easily see how the fund(s) could have run a traded options trade on IBIT (think way OTM calls = ultra high gamma) with borrowed capital in JPY. October 10 may well have blown a hole in their balance sheet, which they tried to win back by adding leverage while waiting for the “obvious” rebound. As that led to increased losses, combined with increased funding costs in JPY, I could see how the funds would have become more desperate and jumped on the silver trade. When it blew up, things got awful and this last push in BTC ended them.
“I have no hard evidence here, just some hunches and breadcrumbs, but it seems very plausible,” White wrote on X.
Bitcoin’s decline over the past week has been less about a slow descent and more about sudden pockets of air, with sharp intraday swings replacing the orderly dip buying seen earlier this year.
The move has pulled BTC back towards levels last traded in late 2024, while liquidity has looked thin across major venues. With altcoins under tighter pressure and sentiment collapsing to post-FTX style readings, now treat every rebound as suspicious until flow and positioning are visibly reset.
