Bitcoin (BTC) experienced one of its biggest sell-offs in the past month, falling more than 40% to hit a year-to-date low of $59,930 on Friday. It is currently down more than 50% from its all-time high in October 2025 of $126,200.

Key conclusions: :

• Analysts point to Hong Kong hedge funds and US bank ETF-linked products as possible causes of the BTC crash.

• Bitcoin could fall below $60,000, bringing the price closer to miners’ break-even point.

Hong Kong Hedge Funds Behind BTC Airdrop?

One popular theory suggests that last week’s Bitcoin crash may have originated in Asia, where some Hong Kong hedge funds have placed significant leveraged bets that BTC will continue to rise.

According to Parker White, chief operating officer and CIO of Nasdaq-listed DeFi Development Corp. (DFDV), these funds took options tied to Bitcoin ETFs like BlackRock’s IBIT and paid for those bets by borrowing affordable Japanese yen.

They exchanged this yen for other currencies and invested in risky assets such as cryptocurrencies, hoping that prices would rise.

This was the day with the highest volume $ Goin history, almost doubling, reaching $10.7 billion today. Additionally, approximately $900 million in option premiums were traded today, also the highest in IBIT’s history. Given these facts and how $BTC AND $SOL today quoted at decreasing prices (usually…

— Parker (@TheOtherParker_) February 6, 2026

When Bitcoin stopped rising and the cost of yen borrowing rose, these leveraged bets quickly lost value. Lenders then demanded more cash, forcing funds to quickly sell Bitcoin and other assets, deepening the price decline.

Morgan Stanley caused a Bitcoin sell-off: Arthur Hayes

Another theory gaining popularity comes from former BitMEX CEO Arthur Hayes.

He suggested that banks, including Morgan Stanley, may have been forced to sell Bitcoin (or related assets) to hedge their exposure in the form of structured notes tied to Bitcoin cash ETFs such as BlackRock’s IBIT.

These are convoluted financial products where banks offer customers bets on the behavior of Bitcoin prices (often with primary collateral or barriers).

When Bitcoin falls sharply, it breaks key levels such as around $78,700 at one point A Morgan Stanley productdealers must delta-hedge when selling the underlying BTC or futures contracts.

This creates “negative gamma”, meaning that as prices continue to fall, security sales accelerate, turning banks from liquidity providers into forced sellers, deepening the downturn.

Miners are switching from Bitcoin to artificial intelligence

Less perceptible but circulating is the theory that the so-called “mining exodus” may have also fueled Bitcoin’s downtrend.

On Saturday write to Xanalyst Judge Gibson said that rising demand for AI data centers is already forcing Bitcoin miners to change direction, which has led to a 10-40% drop in hash rates.

For example, in December 2025, bitcoin mining company Riot Platforms announced a shift toward a broader data center strategy while selling $161 million worth of BTC. Last week, another mining company, IREN, announced a move to AI data centers.

Related: Crypto Stress Test Hits Balance Sheets as Bitcoin and Ether Collapse

Meanwhile, the Hash Ribbons indicator also displayed a warning: the 30-day hashrate average has dropped below the 60-day average, a negative inversion that has historically signaled acute earnings problems for miners and increases the risk of capitulation.

As of Saturday, the estimated average electricity cost of mining one Bitcoin was approximately $58,160, while net production expenses were approximately $72,700.

If Bitcoin falls below $60,000, miners may start to experience real financial stress.

Long-term holders also look more cautious.

The data shows that wallets holding between 10 and 10,000 BTC currently control the smallest share of supply in nine months, suggesting that this group was limiting rather than accumulating exposure.