Author: Nancy, PANews
A black swan-style crash has arrived, but we haven't seen the black swan anywhere, which is even more unsettling.
With almost no warning, Bitcoin suddenly plummeted, entering the third-largest oversold zone in history, with both the account balances and psychological defenses of the bulls breached. What perplexes the market is the lack of a clear trigger for this spiral decline.
Although reasons such as a sharp turn in macro risks, a reassessment of the Fed's hawkish expectations, tightening liquidity, and a chain reaction of leveraged liquidations also explain the direction of the decline, some atypical suspicions are also attempting to explain the eeriness of this round of market movement.
Suspicion One: A Cross-Market Bloodbath Triggered by an Asian Giant
Franklin Bi, a General Partner at Pantera Capital, speculated in a post that the mastermind behind the recent large-scale sell-off in the crypto market was not a company focused on crypto trading, but a large Asian entity from outside the circle. This entity has limited crypto trading counterparts, hence it went undetected by the crypto community.
According to Franklin Bi's speculation, the entity engaged in leveraged trading and market making on Binance → unwound yen carry trades → extreme liquidity crisis → obtained about a 90-day grace period → attempted to recoup losses through gold/silver trading but failed → was forced to liquidate positions this week.
In other words, this is a cross-market leverage mismatch "bloodbath" triggered by the spillover of traditional financial risks. In reality, yen carry positions are an important source of global liquidity. Investors were accustomed to this arbitrage game of zero-cost borrowing in yen, converting it to dollars, and investing in high-yield assets. But as the yen enters a rate-hike cycle accompanied by soaring government bond yields, this game's rules are broken. Bitcoin, as one of the assets sensitive to global liquidity, is often the "go-to ATM" when arbitrage funds withdraw.
From this perspective, this suspicion has some合理性. Bitcoin's decline was particularly sharp and rapid during the Asian trading session.
Parker White, Chief Investment Officer at DeFi Dev Corp, also believes this was a cross-market liquidity stampede.
White pointed out in a post that yesterday (February 5th), BlackRock's IBIT trading volume reached $10.7 billion, almost double the previous record, and the options premium was about $900 million, also setting a historical record. IBIT has become the primary venue for Bitcoin options trading. Combining the synchronous decline of BTC and SOL with the low liquidation volume in the CeFi market, he suspects the volatility stemmed from a forced liquidation of a major IBIT holder.
He further analyzed that several Hong Kong-based funds have allocated most or even 100% of their assets to IBIT. This single-asset structure typically aims to utilize isolated margin mechanisms. The fund in question might have used yen financing for highly leveraged options gambling. Faced with the dual pressures of accelerating unwinding of yen carry trades and today's 20% plunge in silver, the institution attempted to increase leverage to recoup previous losses but failed, ultimately leading to a complete collapse due to a broken capital chain. Since such funds are mostly non-crypto-native institutions and lack on-chain trading counterparts, their risks went unnoticed by the crypto community. However, he also revealed that abnormal, sharp declines in the net asset values of some related Hong Kong funds today have already shown signs.
Combining White's analysis with past 13F disclosure data, the family office Avenir Group, founded by Li Lin, is currently the largest Asian holder of Bitcoin ETFs, owning 18.29 million shares of IBIT with extremely high concentration, accounting for 87.6% of its investment portfolio; others like Yong Rong (Hong Kong) Asset Management, Ovata Capital, Monolith Management, and Andar Capital Management also hold Bitcoin spot ETFs, but their holdings are relatively smaller.
Although the clues point clearly, White emphasized that this is still at the speculation stage. Due to the lag in 13F report disclosures, related holding information is expected to be visible only by mid-May. He also warned that if brokers fail to complete the liquidation in time, the holes that may appear on their balance sheets will be difficult to conceal.
Suspicion Two: US/UK Selling Seized Bitcoin in Huge Quantities
Rumors about possible sales of seized Bitcoin by multiple governments have been fermenting in the crypto community recently.
On the US side, in January this year, a US military operation captured a close associate of Venezuelan President Maduro. Due to Venezuela's long-standing economic crisis and international sanctions,外界猜测 speculated that the country had secretly built a "shadow reserve" of up to 600,000 Bitcoin, sparking discussion about whether the US has seized these assets. However, there is currently a lack of any on-chain evidence to support the claim of a Venezuelan Bitcoin reserve. Another concern comes from the arrest of the founder of the太子集团, Chen Zhi, by the US in October last year, which led to the freezing and seizure of about 127,000 Bitcoin (worth $15 billion at the time), the largest crypto asset seizure in US history. Notably, US Treasury Secretary Scott Bessent recently publicly confirmed that the US government will retain the Bitcoin obtained through asset forfeiture.
At the same time, movements across the Atlantic in the UK are also drawing attention. In November last year, UK police cracked the largest Bitcoin money laundering case in UK history, arresting the main perpetrator, Qian Zhimin, and seizing 61,000 Bitcoin.
Although the Bitcoin held by the US and UK constitutes a huge potential selling pressure expectation, there is currently no evidence of massive on-chain transfers or OTC sales.
Suspicion Three: "Deep Pockets" Drying Up, Negative Liquidity Feedback
Giant institutions once seen as "deep pockets" by the market (such as sovereign wealth funds, giant pension funds, large investment groups, etc.) are now also facing funding shortages and are forced to sell assets to free up cash. The root of this change lies in the fact that the prosperity of the past decade was built on a foundation of low inflation, low interest rates, and high liquidity, and this macro environment has reversed; liquidity is no longer abundant.
In a high-interest-rate environment, funding gaps are increasingly being solved by asset monetization. Over the past few years, large amounts of capital have been allocated to illiquid assets like private equity, real estate, and infrastructure. According to an Invesco report, sovereign wealth funds' average allocation to illiquid alternative assets reached 23% for 2025. These assets are difficult to monetize quickly, making liquidity management itself a strategic priority.
At the same time, a new wave of capital expenditure is accelerating. Particularly, AI has evolved into a globally costly arms race. Its investments have strategic attributes and long-term commitment characteristics, requiring sustained, stable, and massive cash support. It is reported that sovereign wealth funds alone will invest $66 billion in AI and digital-related fields in 2025, which is a substantial test for any institution's cash flow.
Against this background, institutions often prioritize disposing of assets with unclear short-term prospects, high volatility, or relative ease of sale, such as underperforming tech stocks, crypto assets, and hedge fund shares. When more and more forced sellers appear simultaneously in the market, liquidity tension evolves from an individual institution's problem into systemic pressure, ultimately forming a negative feedback loop and continuously suppressing the overall performance of risk assets.
Suspicion Four: Crypto OG "Flight"
Bitwise CEO Hunter Horsley believes that crypto natives and OGs are becoming anxious due to the price drop and choosing to sell, even though they have experienced similar moments countless times over this past ten years. In contrast, institutional investors, wealth managers, and investment professionals are overjoyed. They can finally re-enter at price levels they missed two years ago, or even at a 50% discount compared to four months ago.
Crypto KOL Ignas also said that crypto natives are selling now because they anticipate a 1929-style crash. We all watch Ray Dalio warn about the great cycle ending; we all scroll through posts about the AI bubble; we stare at similar unemployment data, the same "World War III" panic... The result is, the S&P index didn't crash, but the crypto market collapsed first. We are essentially selling to each other. In the end, we are just emotional traders, front-running each other's trades. This constant online state确实 lets us be a step ahead of everyone else in NFTs, MEME coins, Vibe coding, etc. But it also means that crypto natives are always trading in the same direction at the same time, FOMOing together, panic selling together. But boomers and institutional investors don't scroll through crypto Twitter for 14 hours a day; they just hold.
Ignas added that he originally thought ETF involvement would bring holders with different time horizons and types. But reality is not like that. The crypto market is still dominated by retail. We think we are contrarian investors. But when every contrarian investor holds the same thesis, that is essentially consensus. Maybe the next cycle will be different.
In fact, Bitcoin OGs are seen as an important reason for the continued price pressure, especially with the activation of multiple wallets from the Satoshi era last year, moving tens of thousands of BTC. However, these token transfers were not entirely for selling pressure; they might be for address upgrades or custody rotations, but objectively they still加剧了 market panic. According to a recent analysis by Cryptoquant analyst DarkFrost, selling pressure from OG holders has significantly decreased, and the current trend is more倾向于 holding.
