Black Swan is absent, and there may be another reason why Bitcoin is oversold
By Nancy, PANews
Original title: There are no black swans, four atypical speculations that Bitcoin is the “culprit” of overselling
The black swan-style slump is here, but we haven't seen where the black swans are, which is even more disturbing.
With almost no sign, Bitcoin suddenly dived sharply and entered the 3rd largest oversold area in history. The balance of the bulls fell in sync with their psychological defenses. What is puzzling to the market is that there is no clear trigger for this spiral decline.
Although reasons such as a sharp shift in macro risk, the revaluation of hawkish expectations from the Federal Reserve, tightening liquidity, and the trampling of the leveraged liquidation chain also explain the direction of decline, some atypical speculations are also trying to explain the strangeness of this round of market conditions.
Speculation 1: Cross-market bloody incident caused by Asian giants
Franklin Bi, general partner of Pantera Capital, wrote an article speculating that the driving force behind the recent large-scale sell-off in the crypto market was not a crypto-focused trading company, but a large Asian entity from outside the circle. The entity's crypto counterparties are limited and therefore undetected by the crypto community.
According to Franklin Bi's speculation, the entity carried out leveraged trading and market trading on Binance → liquidation of the Japanese yen arbitrage trade → extreme liquidity crisis → received a grace period of about 90 days → failed in an attempt to recover through gold/silver transactions → was forced to close the position this week.
In other words, this is a “bloody case” of cross-market leverage misallocation caused by the spillover of traditional financial risks. In fact, Japanese yen arbitrage positions are an important source of global liquidity. In the past, investors were used to this arbitrage game where they borrowed yen at zero cost, exchanged it for dollars, and then invested in high-yield assets. However, as the yen entered a cycle of interest rate hikes and treasury bond yields soared, this set of rules of the game was broken, and Bitcoin, as one of the world's liquidity-sensitive assets, is often the “preferred ATM” when arbitrage funds are withdrawn.
Judging from this, this speculation is reasonable. Bitcoin's current decline was particularly sharp and rapid during the Asian trading period.
Parker White, chief investment officer at DeFi Dev Corp, also believes that this is a cross-market liquidity stampede.
White posted an article stating that yesterday (February 5) BlackRock's IBIT trading volume reached 10.7 billion US dollars, almost double the previous record high. The options premium was about 900 million US dollars, which also set a historical record. IBIT has become the number one place for Bitcoin options trading. Combined with phenomena such as the simultaneous decline in BTC and SOL and the sluggish settlement volume in the CeFi market, it is suspected that this fluctuation is due to the forced liquidation of a large IBIT holder.
He further analyzed that many funds located in Hong Kong allocate most or even 100% of their assets to IBIT. This single asset structure usually aims to use the segregated security deposit mechanism. The fund involved may use yen financing to conduct a highly leveraged options game. Facing the double pressure of the Japanese yen arbitrage transaction to expedite the liquidation of positions and today's sharp drop in silver by 20%, the institution tried to recover previous losses by increasing leverage, and eventually completely collapsed due to the breakdown of the capital chain. Since most of these funds are non-crypto-native institutions and lack counterparties on the chain, their risk has not been detected by the crypto community before, but he also revealed that an unusually sharp decline in the net worth of some of the relevant Hong Kong funds today is already evident.
Combined with White's analysis and previous 13F disclosure data, Avenir Group, the family office founded by Li Lin, is currently the largest Bitcoin ETF holder in Asia, holding 18.29 million IBIT shares, and has a high concentration of positions, accounting for 87.6% of its investment portfolio; the rest, such as Surge (Hong Kong) Assets, Ovata Capital, Monolith Management, and Andar Capital Management also hold Bitcoin spot ETFs, but the size of their holdings is relatively relatively large small.
Although the clues are clear, White emphasized that it is currently still in the speculation phase. Due to delays in the disclosure of the 13F report, it is expected that relevant position information will not be available until mid-May. At the same time, he also warned that if a brokerage firm fails to complete the liquidation in a timely manner, the loopholes that may appear in its balance sheet will be difficult to cover up.
Speculation 2: US/UK sell huge amounts of seized bitcoins
Rumors that many governments may sell off and seize bitcoins have continued to ferment in the crypto community recently.
On the US side, in January of this year, the US military operation captured Venezuelan President Nicolas Maduro. Due to Venezuela's long-term economic crisis and international sanctions, outsiders speculated that the country had secretly set up a “shadow reserve” of up to 600,000 bitcoins, which led to discussions on whether the US had seized this part of the assets. However, there is currently no on-chain evidence to support the claim that Venezuela reserves Bitcoin. Another concern comes from the freezing and seizure of about 127,000 bitcoins (worth $15 billion at the time) after Chen Zhi, founder of Prince Group, was arrested by the US in October last year. This was the largest crypto asset seizure operation in US history. Notably, US Treasury Secretary Scott Bessent recently publicly confirmed that the US government will keep the bitcoins obtained through asset forfeiture.
Meanwhile, developments in Britain on the other side of the Atlantic have also attracted attention. In November of last year, the British police uncovered the largest Bitcoin money laundering case in British history. The main culprit, Qian Zhimin, was arrested, and 61,000 bitcoins were seized.
Although the Bitcoin seized by the US and the UK poses a huge potential sell-off expectation, there is no evidence of a huge transfer or OTC sell-off on the chain.
Guess 3: “deep pocket” capital is exhausted, and liquidity feedback is negative
Giant institutions (such as sovereign wealth funds, giant pension funds, large investment groups, etc.) that were viewed by the market as “deep pockets” in the past are also facing financial constraints and are forced to sell assets to free up cash. The root cause of this change is that the prosperity of the past decade or more was based on low inflation, low interest rates, and high liquidity, yet this macro-environment has been reversed, and liquidity is no longer abundant.
In an environment of high interest rates, capital gaps are increasingly being addressed through asset monetization. Over the past few years, large amounts of capital have been allocated to illiquid assets such as private equity, real estate, and infrastructure. According to the Invesco report, the average allocation ratio of sovereign wealth funds to illiquid alternative assets reached 23% in 2025. These assets are difficult to quickly monetize, making liquidity management itself a strategic priority.
Meanwhile, a new wave of capital spending is accelerating. In particular, AI has evolved into a global, extremely costly arms race. Its investment is characterized by strategic and long-term commitments, and requires continuous, stable, and large-scale cash support. According to reports, in 2025 alone, sovereign wealth funds will invest as much as 66 billion US dollars in AI and digital-related fields, which is a substantial test of any institution's cash flow.
In this context, institutions often prioritize assets with uncertain short-term prospects, high volatility, or relatively easy to sell, such as underperforming technology stocks, crypto assets, and hedge fund shares. As more and more sellers are forced to appear in the market at the same time, tight liquidity evolves from problems with individual institutions to systemic pressure, eventually forming a negative feedback cycle and continuing to suppress the overall performance of risky assets.
Guess 4: Crypto OG “escapes”
Bitwise CEO Hunter Horsley believes that crypto natives and OGs became anxious and chose to sell off due to falling prices, even though they have experienced similar moments countless times over the past decade. In contrast, institutional investors, wealth managers, and investment professionals are overjoyed. They were finally able to re-enter the market at a price level they missed two years ago, or even at a 50% discount compared to four months ago.
Crypto KOL Ignas also said that the reason crypto natives are selling off now is because they expect a 1929-style crash. We're all watching Ray Dalio warn that the big cycle is coming to an end; we're all blogging about the AI bubble; we're staring at similar unemployment data, the same “World War III” fears... As a result, the S&P Index didn't plummet, but the crypto market crashed first. We're actually throwing things at each other. At the end of the day, we're just emotional traders, putting each other's deals ahead of each other. This long-term online state has indeed made us one step ahead of everyone else in terms of NFTs, MEME coins, Vibe coding, etc. But this also means that crypto natives always trade in the same direction at the same time, that is, FOMO and panic smash the market together. But baby boomers and institutional investors don't spend 14 hours a day tweeting cryptographically; they just hold on.
Ignas also said that it was originally thought that ETF intervention would bring in different types of holders with different time dimensions. But in reality, that's not the case. The crypto market is still dominated by retail investors. We think of ourselves as reverse investors. But when every reverse investor shares the same arguments, it is essentially a consensus. Maybe the next cycle will be different.
In fact, Bitcoin OG is seen as one of the important reasons why prices continue to be under pressure in this round. In particular, several Satoshi Nakamoto era wallets were activated last year, transferring tens of thousands of BTC. However, these token transfers are not entirely pressure-selling; they may be acts such as address upgrades or escrow rotation, but objectively, they still exacerbate market fears. According to recent analysis by CryptoQuant analyst DarkFrost, the selling pressure from OG holders has clearly decreased, and the current trend is to prefer holding.
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