The price of Bitcoin (BTC) briefly fell below the $60,000 mark last week. But this movement did not come out of nowhere. Market analysts point to a combination of risky leverage strategies, risk management at banks and increasing pressure within the mining sector. What exactly was behind this aggressive crash?
Leveraged gambling in Asia goes wrong
An important cause lies with Asian hedge funds that gambled on a further rise in Bitcoin with heavily leveraged positions. Hong Kong funds in particular are said to have bet on price increases through options and other derivatives, including through spot ETFs such as BlackRock’s IBIT.
These positions were partly financed with cheaply borrowed Japanese yen capital. That money was converted into other currencies and invested in crypto assets. When the price of Bitcoin started to fall and financing costs rose, these positions came under pressure. Additional collateral requirements forced funds to sell quickly, which further accelerated the price decline.
According to Parker White, COO of DeFi Development Corp., “the domino effect of forced selling was a direct cause of the acceleration in the price correction.”
Banks dump BTC for risk management
Traditional financial institutions also played a role in the downward momentum. Arthur Hayes, founder of BitMEX, said banks had to sell Bitcoin to hedge risks on structured products linked to spot ETFs.
When the price falls below certain levels, these parties are forced to hedge their exposure by selling BTC or futures. This so-called ‘negative gamma effect’ causes banks to temporarily change from market makers to forced sellers, causing price falls to reinforce themselves.
Decreasing hash rate and miner stress are increasing
In addition to financial parties, the mining sector is also under pressure. Major miners such as Riot Platforms and IREN are partly shifting their focus to AI data centers. This change in strategy was accompanied by the sale of significant amounts of Bitcoin.
The hashrate, the total computing power of the Bitcoin network, has now fallen by approximately ten to forty percent. Historically, such a decline indicates stress among miners. Data from Capriole Investments shows that the total production cost per Bitcoin is around $72,700. At a price below this level, mining becomes financially unattractive.
Finally, on-chain data shows that long-term holders are also becoming more cautious. Wallets holding ten to ten thousand BTC currently hold the smallest share of the total supply in nine months, indicating a reduction in positions among large holders.
date:2026-02-08 08:03:00
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