Bitcoin’s drop to nearly $60,000 on Thursday, a nearly 30% drop in 7 days, caused
Flood, a prominent cryptocurrency trader, called it in an
Few theories: – A secret sovereign disposes of more than 10 billion dollars (Saudi Arabia/United Arab Emirates/Russia/China). – An exchange explosion, or an exchange that had tens of billions of dollars of Bitcoin on its balance sheet and was forced to sell for whatever reason.
Pantera Capital general partner Franklin Bi offered a more detailed theory. He suggested that the seller could be a large player based in Asia with limited crypto-native counterparties, meaning they would not be “spotted” quickly by the market.
My guess is that this is not a trading company focused on cryptocurrencies, but rather someone big outside of cryptocurrencies, probably based in Asia, with very few native crypto counterparts. hence no one has detected them using a CT scan. comfortably leveraged and market making on Binance –> JPY carry trade reduced –> 10/10 liquidity crisis –> ~90 days reprieve granted –> failed attempt to recover in gold and silver trading –> Desperate unwinding this week.
In his view, the chain of events may have started with leverage on Binance, then worsened as carry trades unraveled and liquidity evaporated, with a failed attempt to recoup losses in gold and silver accelerating the forced unwinding this week.
But the most unusual narrative emerging from the crisis has nothing to do with leverage. It’s about security.
Capriole’s Charles Edwards argued that falling prices could finally force serious attention to bitcoin’s quantum security risks.
Edwards said he was “serious” when he warned last year that Bitcoin might need to drop to spur meaningful action, calling recent developments the first “promising progress” he has seen so far.
$50,000 isn’t that far off now. I was serious when I said last year that the price would have to drop to incentivize proper attention to Bitcoin’s 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.
It would have significant influence across the network to bring about change. I’m concerned that his statement today is a false flag, simply to diminish the growing quantum fear without substantial 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, chief operating officer and CIO of DeFi Development Corp., pointed to unusual activity in BlackRock’s spot bitcoin ETF (IBIT) as a possible culprit for Thursday’s flop.
He noted that IBIT posted its highest daily volume ever at $10.7 billion, along with a record $900 million options premium, arguing that the pattern fits a large options-driven sell-off rather than a typical crypto-native leverage easing.
The last bit of evidence I have is that I personally know several Hong Kong-based hedge funds that are holders of $DFDV, which had the worst down day in history, with mNAV falling significantly. The mNAV had remained surprisingly stable throughout this pullback until today. One of these funds could have been connected 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 have only one fund.
Now, you could easily see how the funds could have been executing a leveraged options trade on IBIT (think what OTM calls = ultra-high gamma) with borrowed capital in JPY. October 10 could well have opened a hole in their balance sheet, which they tried to recover by adding leverage waiting for the “obvious” rebound. As that led to higher losses, along with higher JPY funding costs, I could see how funds would have become more desperate and rushed into the silver trade. When that blew up, things got ugly and this latest push into BTC wiped them out.
“I have no hard evidence here, just some hunches and breadcrumbs, but it seems very plausible,” White wrote in X.
Bitcoin’s decline over the past week is less due to a slow decline and more to sudden pockets of air, with strong intraday swings replacing the orderly buying seen earlier this year.
The move has dragged BTC back to levels last traded in late 2024, while liquidity appears tight in major venues. With altcoins under increased pressure and sentiment collapsing to post-FTX style readings, traders are now treating every bounce as suspicious until flows and positioning are visibly restored.
