Bitcoin’s crash to $60,000 has traders hunting for a hidden fund blowup
Bitcoin’s plunge to nearly $60,000 on Thursday, a nearly 30% drop over 7 days, has got traders on X began floating theories that the selloff was not purely macro or risk-off, but various reasons that contributed to the asset’s worst single-day performance since FTX crashed in 2022.
Flood, a prominent crypto trader, called it in an X post the most vicious selling he’s seen in years and said it felt “forced” and “indiscriminate,” floating possibilities ranging from a sovereign dumping billions to an exchange balance sheet blowup.
Few theories: – Secret Sovereign dumping $10B+ (Saudi/UAE/Russia/China) – Exchange blowup, or Exchange that had tens of billions of dollars of Bitcoin on the balance sheet forced to sell for whatever 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 counterparties, meaning the market would not “sniff them out” quickly.
My guess is that it’s not a crypto-focused trading firm but someone large outside of crypto, likely based in Asia, with very few crypto-native counterparties. hence why no one has sniffed them out on CT. comfortably leveraged & market-making on Binance –> JPY carry trade unwind –> 10/10 liquidity crisis –> ~90-day reprieve granted –> backfired attempt to recover on gold/silver trade –> desperate unwind this week.
In his view, the chain of events may have started with leverage on Binance, then worsened as carry trades unwound and liquidity evaporated, with a failed attempt to recover losses in gold and silver accelerating the forced unwind this week.
But the more unusual narrative emerging from the crash is not about leverage. It is about security.
Charles Edwards of Capriole argued that falling prices may finally force serious attention on bitcoin’s quantum security risks.
Edwards said he was “serious” when he warned last year that bitcoin might need to go lower to incentivize meaningful action, calling recent developments the first “promising progress” he has seen so far.
$50K not that far away now. I was serious when I said last year that price would need to go lower to incentivize proper attention to Bitcoin quantum security. This is the first promising progress we have seen to date. I genuinely hope Saylor is serious about establishing a well funded Bitcoin Security team.
He would have significant sway across the network in affecting change. I am concerned that his statement today is a false flag, to simply diminish mounting quantum fear without substantive action, but I would love for this to be wrong. We have a lot of work to do, and it needs to be done in 2026.
Parker White, COO and CIO at DeFi Development Corp., pointed to unusual activity in BlackRock’s spot bitcoin ETF (IBIT) as a possible culprit behind Thursday’s washout.
He noted IBIT posted its biggest-ever volume day at $10.7 billion, alongside a record $900 million in options premium, arguing the pattern fits a large options-driven liquidation rather than a typical crypto-native leverage unwind.
The last small piece of evidence I have is that I personally know a number of HK-based hedge funds that are holders of $DFDV, which had the worst single down day ever, with a meaningful mNAV decline. The mNAV had been holding steady surprisingly well throughout this pull back until today. One of these fund(s) could have been connected to the IBIT culprit, as I highly doubt a fund taking that large of a position in IBIT and using a single entity structure would only have the one fund.
Now, I could easily see how the fund(s) could have been running a levered options trade on IBIT (think way OTM calls = ultra high gamma) with borrowed capital in JPY. Oct 10th could very well have blown a hole in their balance sheet, that they tried to win back by adding leverage waiting for the “obvious” rebound. As that led to increased losses, coupled with increased funding costs in JPY, I could see how the fund(s) would have gotten more desperate and hopped on the Silver trade. When that blew up, things got dire and this last push in $BTC finished them off.
“I have no hard evidence here, just some hunches and bread crumbs, but it does seem very plausible,” White wrote on X.
Bitcoin’s drop over the past week has been less about a slow grind lower and more about sudden air pockets, with sharp intraday swings replacing the orderly dip-buying seen earlier this year.
The move has dragged $BTC back toward levels last traded in late 2024, while liquidity has looked thin across major venues. With altcoins under heavier pressure and sentiment collapsing to post-FTX style readings, traders are now treating each rebound as suspect until flows and positioning visibly reset.
