Bitcoin’s price collapse this week — a gutting, near-30% drop that briefly threatened the $60,000 line — didn’t arrive with a single smoking gun. Instead, it produced a fog of plausible culprits: forced liquidations, ETF selling, a possible Asia-based fund blowup, chaotic precious‑metals moves, and even renewed talk about bitcoin’s long-term security.
Traders woke up Thursday to sudden, indiscriminate selling. Liquidations piled up — more than $2 billion wiped out on some platforms according to public trackers — and intraday swings replaced the steadier pullbacks the market had seen in recent months. That kind of speed breeds stories; if you’re in markets long enough you learn that storytelling often comes before proof.
The “someone big” theory
Several prominent traders and analysts on X put forward the same core suspicion: this wasn’t just retail fear or a routine correlation sell-off with tech stocks. Flood, a widely followed trader, described the move as the most vicious he’d seen in years and said it “felt forced” and “indiscriminate.” Pantera’s Franklin Bi sketched a plausible timeline: an outsized, non‑crypto player — likely Asia‑based and thinly connected to crypto counterparties — runs a leveraged market‑making or carry trade that unravels, forcing sales in size that the market can’t absorb.
That scenario explains the suddenness. When a single, large holder needs to convert BTC to cash quickly, the market can’t respond with depth; prices gap, algorithms trigger stops, and the cascade accelerates. Some traders traced the path to yen funding stress and a carry trade unwind, a classic cross‑market mechanism that can amplify losses far beyond crypto’s native leverage.
ETFs and options: institutional flows that can burn
Others pointed to activity around spot bitcoin ETFs — especially BlackRock’s IBIT — as a likely amplifier. On the same day as the plunge IBIT showed record volume (roughly $10.7 billion) and a record day for options premium (about $900 million). That combination can create huge gamma- and delta-driven moves in the underlying, particularly if someone was running levered options positions and had to squash risk fast.
Parker White and other market sleuths suggested a linked hedge fund story: a Hong Kong fund holding ETF shares or levered options tied to IBIT suffers a margin shock, tries to recover with other bets (there were mentions of gold and silver trades) and ultimately has to liquidate, dumping BTC as one of the few liquid assets available.
CNBC and others highlighted a related point: the institutional narrative has flipped. ETFs that were buying aggressively last year have turned into net sellers in 2026, with data showing billions flowing out of specialized spot BTC funds since October. For investors who averaged into ETFs at much higher prices, the math makes selling during pain somewhat inevitable.
Macro and metals: collateral damage from a volatile week
This wasn’t purely a crypto story. Gold and silver lurched wildly — hitting fresh highs and then plunging within days — and global equity volatility rose. Bitcoin’s new role as a risk asset alongside tech stocks means it’s vulnerable when broader risk premia shift. Deutsche Bank and other analysts pointed to steady ETF outflows and a weaker appetite among traditional investors as structural headwinds.
Kaiko and other data providers called this phase a “crypto winter” in the making: lower volumes, thinner liquidity, and hype that evaporates just when markets need it most. Thin liquidity makes each large trade more damaging; the same size order that moves markets a little when volumes are high can crater them when volumes are low.
Security worries rear their head
Beyond flows and leverage, an unexpected conversation returned: bitcoin’s security posture. Charles Edwards at Capriole argued that lower prices — by thinning liquidity and focus — might finally force meaningful work on quantum resistance. That’s a longer‑term structural risk fewer investors keep top of mind during bull runs, but it gains attention in episodes when prices and sentiment both fall.
Debates about security aren’t limited to cryptography. The tech stack around markets — from trading apps to infrastructure code — still carries vulnerabilities, as recent high‑profile software flaws have shown. For readers interested in how software flaws can ripple through ecosystems, consider the recent React Native CLI vulnerability disclosure that underscored how tooling flaws propagate risk. And on the AI front, as big tech folds deeper into productivity and research workflows, new dynamics could further shape market structure; the growth of models that index and surface private data is illustrative of how quickly tooling changes financial workflows — see developments in deep research integration with Gmail and Drive.
How low could this go? And what happens next
Sentiment is fragile. Some analysts now see BTC revisiting the $50,000 range later this year; a few even pencil in $40K under extreme stress. Others expect a counter‑trend bounce before deeper tests in the summer. Historically, crypto downturns tend to be protracted and punctuated by episodes of extreme pain and local relief.
What would stabilize things? A clearer narrative: either visible buyers stepping in (institutional reallocations), evidence that a single fund has been dealt with and won’t keep selling, or a sustained return of trading volumes so market‑making can normalize spreads. Without that, every rally will feel suspect.
For now, traders are doing what they always do in volatility: hunting for the culprit, hedging where they can, and waiting for the order books to recover. The market’s appetite for risk has shifted — whether temporarily or as part of a longer cycle — and until flows and positioning visibly reset, reed‑thin liquidity will keep amplifying outsized moves.
This week’s selloff didn’t produce a single smoking gun, just a cluster of plausible explanations that can coexist: forced liquidations, ETF and options mechanics, shaky macro sentiment, and structural security questions that gain oxygen when prices fall. That messy overlap is exactly why crypto markets still surprise; they remain an arena where cross‑market stresses, exotic derivatives and concentrated holders can collide with dramatic effect.