According to a new report from analytics firm 10x Research, market speculation is mounting that a "multi-billion-dollar Hong Kong hedge fund" has broken down.
This has exacerbated the selling pressure that saw Bitcoin plunge from $90,000 to $60,000 in under a month.
Caught off guard
Of course, the sheer speed of the recent drawdown has puzzled analysts, and many were desperate to find answers.
"Bitcoin’s rapid decline from $90,000 to $60,000 in just two to three weeks caught many traders off guard, both in speed and magnitude," 10x Research stated in their latest update.
The firm noted that trading volumes for BlackRock’s IBIT Bitcoin ETF exploded during the sell-off, which makes this crash rather peculiar.
Based on "the sharp increase in ETF trading volume" during this period, it is likely that the move was caused by large-scale institutional flows, hedging activity, and the unwinding of structured positions."
At the peak of the volatility, daily trading volume for the ETF "exceeded $10 billion," which was highly unusual.
The Asian connection
As noted by the firm, nearly all of silver’s gains over recent months occurred during Asian sessions.
This shows that regional positioning and balance sheet deployment have played an outsized role in recent market moves.
It is this specific concentration of activity that has fueled the rumor mill regarding a distressed entity operating out of Hong Kong.
"In the absence of a clear structural framework, this has led to speculation that the potential distress or unwinding of a multi-billion-dollar Hong Kong hedge fund may be the primary cause of Bitcoin’s decline."
However, 10x Research urged caution before pinning the entire market crash on a single entity.
Vladislav Sopov
Dan Burgin