In response to the widespread claim that “forced liquidation by Hong Kong hedge funds triggered a Bitcoin crash,” Dovey Wan, founder of Primitive Ventures, offered several rebuttals based on his observations within the Hong Kong fund industry, arguing that the current narrative suffers from clear biases of the American perspective and structural misjudgments.
Hong Kong's financial sector is very small; how could someone go bankrupt and no one know?
She pointed out that some market analysts interpret the flow of funds into ETFs as a tax avoidance strategy, but this logic mainly stems from the tax environment of US investors. Hong Kong does not have a capital gains tax, so so-called tax-free harvesting is not a primary motivation for Asian funds.
More importantly, she emphasized that Hong Kong's institutional circles are highly concentrated and information flows rapidly: "Hong Kong's financial circle is very small. If a large institution has problems, it is almost impossible to hide it for more than a month." She revealed that her team is currently conducting due diligence on a large Bitcoin options strategy fund in Hong Kong. No abnormalities have been found in recent performance and communication, and there have been no rumors of liquidation since October last year.
She cited the collapse of Taipingshan, a Hong Kong market maker associated with 3AC, as an example, pointing out that the market grasped the situation quickly, indicating that if this were truly a major risk for a Hong Kong OG or family office, clear signals would have already appeared within the industry. Furthermore, many Asian Bitcoin OGs had already used Galaxy to one-way exchange Bitcoin to IBIT-style trading platforms long before the physical redemption function became available.
Wintermute CEO: Remain skeptical of rumors about exchange and fund bankruptcies.
Evgeny Gaevoy, CEO of market maker Wintermute, also expressed skepticism about rumors like "someone exploded." He said that while someone might have indeed exploded, there might not be any spillover effect to warrant our attention. He noted that after Three Arrows Capital's collapse, the news spread rapidly through private messages, and almost everyone knew about it. However, since October 10th of last year, all rumors about market makers and fund bankruptcies have originated from anonymous accounts, and no credible person has confirmed them.
He analyzed that a very high leverage is required for liquidation. In the previous cycle, most of the leverage came from non-collateralized lending platforms like Genesis and Celsius. In this cycle, however, most of the leverage comes from perpetual contracts. Compared to non-collateralized lending, perpetual contracts are more regulated and orderly, and exchanges have learned how to manage margin through them. Deribit was the only exchange to lose money in 3AC trading in the previous cycle. He believes that since then, no exchange has been willing to take such risks.
This is why he is now skeptical of rumors about the exchange's collapse. No one would invest user deposits in illiquid assets like FTX has. And if someone were truly bankrupt and denied it, that would be extremely risky (and they could face lawsuits if they were in Europe, the US, the UK, or Singapore).
Asian BTC whale are shifting their investments into ETFs primarily due to risk control and asset efficiency considerations.
Regarding the large-scale "movement of older coins" observed in the market, Dovey Wan believes this does not necessarily represent an actual sell-off. She stated that many early Asian Bitcoin whale had already transferred their holdings into "IBIT-type TradeFi tracks" through institutional channels long before ETFs supported physical redemptions, primarily for reasons including:
- Easier custody and asset management
- Reduce operational and counterparty risks
- It can be used as collateral in the traditional financial system.
- Provides cleaner liquidity, making it easier to allocate to other traditional assets.
In other words, the asset movement observed on-chain or on exchanges may simply be a change of venue, rather than an actual sell-off. Dovey Wan further points out that since the second half of 2025, Bitcoin trading activity has shown a significant structural change: trading volume has gradually concentrated during US trading hours, especially in the early stages of the New York market opening.
Recent spot selling pressure across major exchanges has also been concentrated during this period. She observed that even Binance, one of the world's largest exchanges, experienced unusually large spot sell-offs during the US stock market opening, indicating that market pressure may stem from downstream selling following ETF redemptions, rather than a panic sell-off in the native crypto market. This phenomenon also echoes recent market data showing record-high trading volume on IBIT, indicating that adjustments in traditional financial funds are becoming a significant force influencing Bitcoin's short-term price.
If a fund does indeed experience a margin call, it's more likely that TradFi's volatility strategy has gone out of control.
Dovey Wan also questioned another popular market speculation: "a Bitcoin fund was liquidated due to options trading." She pointed out that a simple covered call strategy usually carries limited risk unless the fund engages in:
- Naked short options
- High-leverage basis or carry trades
- Cross-margin structure operations
Such strategies could quickly spiral out of control only if the spread between IBIT and the spot price unexpectedly widens. Therefore, she believes that if "volatility selling liquidation" does indeed exist in the market, it is more likely to originate from institutions with traditional financial structures than from typical Bitcoin OG family offices.
Li Lin clarified: He did not reduce his holdings of BTC or ETH, and is not an investor of Yi Lihua or Garrett.
Regarding Garret Jin and Trend Research using the same Binance deposit address, she added that Trend Research is completely inconsistent with their position; they only hold Ethereum and do not have traditional financial traders. Garret Jin's boss/client may be holding a large amount of Bitcoin to sell, but why would they force a sell-off at this price? The list circulating in the market does not include major Hong Kong BTC OG firms such as Avenir, suggesting that the market should expand its investigation to sources of volatility selling outside of Hong Kong.
Du Jun also clarified that Li Lin's privately-owned Avenir Group remains the largest holder of IBIT in Asia, with 80% of its Ethereum staked. The screenshot of Li Lin's WeChat Moments that he shared also shows that Li Lin himself has been out of the spotlight for many years, is not an investor in Yi Lihua or Garret Jin, and has not reduced his Bitcoin or Ethereum holdings in this round.
Did this article point to the wrong culprit? Dovey Wan: The BTC crash may not be due to Hong Kong institutions, but rather to TradeFi deleveraging . This ABMedia first appeared on ABMedia .
