- Bitcoin plunged over 40% in a month, hitting a yearly low near $60,000, down more than 50% from its 2025 peak.
- Analysts point to forced selling by Hong Kong hedge funds and U.S. bank hedging activities as key crash drivers.
- Miners are experiencing financial stress and shifting to AI, raising the risk of a broader mining capitulation.
Bitcoin (BTC) experienced one of its most severe sell-offs in a month, plummeting over 40% to a year-to-date low near $60,000 by Friday. This sharp decline has erased more than half of the leading cryptocurrency’s value from its all-time high of nearly $126,200 in October 2025.
One prominent theory, proposed by Parker White of DeFi Development Corp., suggests the crash originated with highly-leveraged Hong Kong hedge funds. These funds reportedly used borrowed Japanese yen to place massive bets on Bitcoin’s continued rise through ETF-linked options.
Consequently, when Bitcoin’s rally stalled and borrowing costs rose, lenders demanded more cash, forcing rapid asset liquidation. This created a cascade of selling pressure that exacerbated the market downturn, as detailed in a related post on X.
Meanwhile, former Bitmex CEO Arthur Hayes offered an alternative explanation centered on U.S. financial institutions. Banks like Morgan Stanley may have been forced to sell Bitcoin to hedge exposure in structured notes tied to spot ETFs.
Specifically, a sharp price drop below certain levels in products like one noted Morgan Stanley offering can trigger accelerated hedging sales. This dynamic turns banks into forced sellers during downturns, amplifying price declines.
Separately, a potential mining exodus is adding fundamental pressure to the network. Analyst Judge Gibson highlighted in a Saturday post on X that miners are pivoting to lucrative AI data center opportunities.
This strategic shift is evidenced by companies like Riot Platforms and IREN publicly moving resources away from Bitcoin. Consequently, the network’s hash rate has dropped between 10% and 40%, signaling miner stress.
Furthermore, key on-chain metrics are flashing warning signs for miner sustainability. The estimated net cost to produce one Bitcoin is roughly $72,700, while the electrical cost is around $58,160.
As Bitcoin tests the $60,000 support level, miners face heightened financial risk. Long-term holders also appear cautious, with major wallets controlling their smallest supply share in nine months.
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