According to a report by Fortune on February 7th, as reported by TechFlow TechFlow, Bitcoin's price plummeted by nearly $15,000 in 24 hours this week, marking the most severe drop since the FTX collapse in 2022. Bitcoin has since recovered to approximately $70,000.
Parker White, COO of Solana DeFi Development Corporation, a US-listed treasury firm, offered an explanation: Hong Kong hedge funds used yen carry trades to establish highly leveraged positions in over-the-counter options on the BlackRock Bitcoin Exchange Traded Fund (IBIT), betting on a Bitcoin price rebound. However, the expected rebound failed to materialize, and rising yen funding costs and volatility in the silver market further exacerbated the funds' predicament.
White points out that these Hong Kong funds primarily trade Bitcoin through ETFs and are not part of the traditional crypto ecosystem, hence their predicament did not generate discussion on "crypto Twitter." Other factors, such as the sell-off of AI-related assets, uncertainty surrounding blockchain legislation, and the appearance of crypto names in the Epstein documents, may also have contributed to this week's market crash.
Venture capitalist Haseeb Qureshi believes the theory is sound, but it may take months to wait for regulatory documents to confirm it.
