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"What Caused the Great Bitcoin Crash? Evidence Points to Hedge Fund Collapse in Hong Kong"

By: Jeff Roberts, Fortune Magazine
February 6, 2026 Translated with some adaptation

Summary:
- Main causes of the crash:
- Hong Kong Hedge Fund Theory: Collapse of hedge funds that used "Yen Carry Trade" (Yen Carry Trade) to finance highly leveraged positions in Bitcoin options for a BlackRock ETF trading Bitcoin spot ‎$ibit (the largest Bitcoin ETF), with additional losses from the silver market.
- Liquidation of positions: The value of positions declined as the market fell, leading to forced sales of shares in the IBIT fund and a price collapse.
- Other contributing factors: Selling in AI assets, legislative ambiguity around blockchain, and Bitcoin's links to Epstein files.

Full article for those interested:
Cryptocurrency markets experienced a severe shake this week, with Bitcoin dropping about $15,000 in 24 hours—a crash unseen since the fall of the FTX platform, the infamous scam empire of Sam Bankman in 2022.
On Friday, Bitcoin recovered most of its losses, now trading near $70,000, but the incident left even the most seasoned crypto experts questioning: "What the hell just happened?!"

Several theories are circulating, but one seems particularly convincing:
Multiple indicators point to a collapse caused by hedge funds in Hong Kong that took highly leveraged bets on Bitcoin, which ended in explosion and total loss.

- Hong Kong Hedge Fund Collapse Theory:
This theory was previously posted on X (Twitter) by former trader "Parker White," now Deputy CEO at DeFi Development Corporation.
In a long thread, White said there is evidence of a sudden collapse in Hong Kong hedge funds that held call options (Call Options) in the BlackRock IBIT fund, the largest Bitcoin ETF in the world.

White believes these funds used what is known as Yen Carry Trade (Yen Carry Trade)—a type of arbitrage based on interest rate differentials—to finance massive positions in out-of-the-money call options (Out-of-the-Money Options) in the IBIT fund.
These positions were a risky bet on rising Bitcoin prices, which had been stagnant since the big sell-off last October. But the expected rise did not materialize.

Meanwhile, these funds faced increasing financing costs due to disruptions in the Japanese yen market*,+ and losses in the global silver market.
As a result, the funds faced a "perfect storm"—and as the crypto market continued to decline this week, their holdings' value plummeted until they were fully liquidated, forcing them to sell large amounts of IBIT shares and causing a catastrophic Bitcoin price collapse*+.

- "Leverage Explosion and Risk": Simplified explanation:
White wrote in trader language:
> I can imagine these funds were managing highly leveraged call positions on IBIT (Very Out-of-the-Money Calls = Very High Gamma), financed with Japanese yen debt.
> Maybe October 10 caused a big hole in their balance sheets, and they tried to cover it by adding more leverage, waiting for a "clear rebound."
> As losses mounted and financing costs rose, they probably became more desperate to take risks, entered the silver trade... and when that trade also exploded, Bitcoin's collapse finished them off completely.

White also pointed out that these funds do not deal directly with cryptocurrencies but only through ETFs, making them outside the traditional crypto ecosystem.
Therefore, no warning signals appeared on specialized social networks like "Crypto Twitter," and these funds had no counterparties in the market issuing early alerts.

- Other factors contributing to the collapse:
This remains an educated guess. History shows that major Bitcoin crashes often result from multiple factors converging simultaneously, not a single cause.
Indeed, this week's collapse coincided with widespread sell-offs in AI stocks, political uncertainty over a new blockchain regulation bill, and sensational reports of crypto figures linked to Epstein files—all factors fueling Thursday's panic.

Nevertheless, White's explanation remains the most convincing so far, especially as it is supported by other circumstantial evidence, such as the recent SEC (U.S. Securities and Exchange Commission) decision to lift restrictions on Bitcoin options trading, which increased position sizes.

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