The recent sharp decline in Bitcoin's price, which saw it briefly touch $60,000 on February 5, 2026, is being attributed by industry experts to a combination of traditional finance (TradFi) de-risking mechanics and the damaging effects of speculative, low-quality crypto projects.
Jeff Park, an advisor at Bitwise Asset Management, presented a detailed analysis arguing the crash was not triggered by a crypto-specific fundamental failure or a 'Black Swan' event. Instead, he points to a cascading effect of deleveraging within multi-asset portfolios in the TradFi sector. As these portfolios moved to reduce exposure in a volatile market, their hedged Bitcoin positions were also unwound. This triggered aggressive selling from other multi-strategy hedge funds, who were forced to sell to maintain their internal risk models.
Park explained this TradFi de-risking spilled over into Bitcoin, amplifying volatility through mechanisms like short gamma effects from options and basis trades. He noted that during the downturn, counterparties were forced to sell shares of Bitwise's Bitcoin ETF (IBIT), worsening the price decline. Despite the rapid two-day drop, spot Bitcoin ETFs overall saw net inflows, with IBIT alone adding around 6 million shares and growing by over $230 million. A rebound began on February 6 as some neutral strategies rebuilt positions.
Concurrently, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, blamed the market downturn on "grifters" and fraudulent speculative projects. He argues that scam tokens act as parasites, draining capital away from legitimate assets like Bitcoin during price surges. When these low-utility, high-hype projects inevitably collapse, they leave the market without new catalysts, triggering a cycle of selling. Gerber states this predictable pattern has played out in each major Bitcoin cycle, causing significant losses for retail investors and increasing overall market volatility.
Despite the chaos, both perspectives offer a bullish long-term outlook. Park views the event as a technical sell-off and a temporary market inefficiency, which could aid rapid price recovery and encourage dip buying—a theory supported by the subsequent rebound and over $300 million in net ETF inflows after the crash. Gerber remains a firm believer in Bitcoin's potential, with his firm continuing to hold it alongside major equities like Nvidia. He warns investors to avoid speculative hype and focus on solid, long-term assets.
The analysis aligns with views from figures like Eric Balchunas, senior ETF analyst at Bloomberg, who classified Bitcoin as a "very volatile commodity" and suggested such a pullback was natural after a roughly 450% price increase over two years.
