What Crashed Bitcoin? Three Theories Behind the 40% Drop

Bitcoin plunged more than 40% over the past month, sliding to $59,930 and trading more than 50% below its October 2025 all-time high near $126,200. The move marked one of the biggest sell-offs in recent weeks and left traders watching key price and miner-cost levels closely.

One theory points to Hong Kong hedge funds that placed large, leveraged bets tied to Bitcoin ETFs such as BlackRock’s IBIT. Parker White, COO and CIO of DeFi Development Corp. (DFDV), said these funds financed options positions by borrowing cheap Japanese yen, swapping it into other currencies and buying risky assets; when yen funding costs rose and prices stopped climbing, lenders demanded cash and rapid selling followed.

Another explanation comes from Arthur Hayes, who suggested banks offering structured notes linked to spot Bitcoin ETFs were forced to hedge by selling BTC or futures after sharp declines, creating a cycle of accelerating sales described as 'negative gamma'.