Bitcoin's price experienced a severe downturn, plummeting sharply below $67,000 and testing levels near $60,000. This represents a nearly 30% drop over seven days, marking the asset's worst single-day performance since the FTX collapse in 2022.
The sell-off triggered over $3 billion in liquidations in the Bitcoin market over an eight-day period, with more than 59,000 investors liquidated in a single morning, resulting in an additional $730 million in forced sales. Analysts from Glassnode noted the futures market has entered a "forced delegitimization" phase, where large waves of long liquidations are increasing volatility and fueling the decline.
Market observers are searching for explanations beyond simple macro risk-off sentiment. Prominent crypto trader Flood described it as "the most vicious selling he's seen in years," feeling "forced" and "indiscriminate." Theories circulating among traders include a sovereign entity (potentially from Saudi Arabia, UAE, Russia, or China) dumping over $10 billion in Bitcoin, or an exchange experiencing a balance sheet blowup and being forced to sell.
Franklin Bi, a general partner at Pantera Capital, offered a detailed hypothesis. He suggested the seller could be a large Asia-based player with limited crypto-native counterparties, making them difficult to detect. Bi outlined a potential chain of events: leverage on Binance, an unwind of a JPY carry trade, a liquidity crisis around October 10th, a failed attempt to recover losses via gold and silver trades, culminating in a desperate unwind this week.
Parker White, COO and CIO at DeFi Development Corp., pointed to unusual activity in BlackRock's spot Bitcoin ETF (IBIT) as a possible culprit. IBIT posted its biggest-ever volume day at $10.7 billion alongside a record $900 million in options premium. White argued this pattern fits a large options-driven liquidation, potentially connected to Hong Kong-based hedge funds running levered options trades on IBIT with borrowed JPY capital.
Amid the crash, Binance founder Changpeng "CZ" Zhao made a humorous post on X, stating "I'm poor again." He recalled making a similar comment when Bitcoin dropped from $67,000 to the $30,000 range previously, adding "it didn't end up too badly" in an allusion to the subsequent bull market.
The downturn is testing the resilience of new individual investors who entered at near-peak levels and Wall Street's recently increased confidence in crypto. Despite the selling pressure, a strong buying base has yet to emerge, with large buyers from last year's rally having withdrawn and inflows from ETFs and corporate earnings slowing. Glassnode notes the market has been deprived of the "stable buying support" seen in previous rallies.
Charles Edwards of Capriole introduced a separate narrative, suggesting falling prices may finally force serious attention to Bitcoin's quantum security risks, calling recent developments the first "promising progress" he has seen to incentivize action.
