Odaily Planet Daily reports that Bitwise advisor Jeff Park reviewed the sharp decline in Bitcoin and the crypto market on February 5th. He believes this volatility was more likely triggered by risk unwinding in the traditional financial system and derivatives mechanisms, rather than the fundamental health of the crypto industry or a single “black swan” event.
Jeff Park pointed out that on that day, Bitcoin ETFs, especially IBIT, experienced record-breaking trading volume and options activity, with options trading predominantly in a bearish direction. At the same time, Bitcoin’s price movement over the previous weeks was highly correlated with risk assets like software stocks. February 4th was marked by Goldman Sachs’ prime broker (PB) department as a day of extreme drawdowns for multi-strategy funds. Subsequently, risk management requirements prompted rapid, indiscriminate deleveraging, which affected Bitcoin-related positions and further amplified the decline on February 5th.
He analyzed that although the price dropped over 13% within two days and the market initially expected large-scale ETF outflows, actual data showed that Bitcoin ETFs experienced net inflows overall. IBIT added approximately 6 million shares, increasing by over $230 million in scale. This suggests that the selling pressure mainly came from “paper funds” and non-directional trading related to hedging and market making, rather than long-term capital withdrawals.
Jeff Park further hypothesized that: in a high-correlation environment, multi-asset portfolios are forced to deleverage, including Bitcoin risk exposure after hedging; rapid liquidation of options and basis trades triggered a short gamma effect, forcing counterparties to sell IBIT during the decline, thus exacerbating volatility, but without causing substantial long-term capital outflows. As some neutral strategies covered positions on February 6th, Bitcoin’s price rebounded.
He summarized that this round of decline is more likely the result of resonance between risk management in traditional finance and derivatives mechanisms, rather than a fundamental deterioration of the crypto market itself. The subsequent changes in ETF net flows over the next few days will be an important indicator to assess whether there is new growth demand.
Disclaimer: The information on this page may come from third parties and does not represent the views or opinions of Gate. The content displayed on this page is for reference only and does not constitute any financial, investment, or legal advice. Gate does not guarantee the accuracy or completeness of the information and shall not be liable for any losses arising from the use of this information. Virtual asset investments carry high risks and are subject to significant price volatility. You may lose all of your invested principal. Please fully understand the relevant risks and make prudent decisions based on your own financial situation and risk tolerance. For details, please refer to
Disclaimer.
Related Articles
Grayscale Research Head: Bitcoin Rally Above $76K Could Signal Start of Bull Market Phase One
Grayscale research head Zach Pandl analyzes Bitcoin's rebound from a February low, using the realized price metric to show recent buyers at breakeven and hint at an early bull phase, with a reported bottom around $65k-$70k.
Grayscale’s Pandl: Bitcoin hit ~63k in Feb, rose to ~76k; realized price ~74k shows recent buyers breakeven, hinting at early bull phase and a bottom around 65-70k.
GateNews52m ago
Scammers Impersonating Iranian Officials Demand Bitcoin and USDT from Ships in Strait of Hormuz
Gate News message, April 21 — Scammers posing as Iranian officials are demanding Bitcoin (BTC) and Tether (USDT) as transit fees from ships in the Strait of Hormuz, according to a warning from MARISKS, a Greece-based maritime risk management firm. The scheme falsely promises "safe transit
GateNews1h ago
Bitcoin, Ethereum and Solana ETFs Record Positive Net Inflows on April 21
Gate News message, according to the April 21 update, Bitcoin ETFs recorded a 1-day net inflow of 3,599 BTC (approximately $272.59 million) and a 7-day net inflow of 18,914 BTC (approximately $1.43 billion). Ethereum ETFs showed a 1-day net inflow of 34,380 ETH (approximately $79.25 million) and a 7-
GateNews1h ago
Fidelity and Capital Group Become Strive's Two Largest Shareholders
Gate News message, April 21 — Fidelity and Capital Group have become the two largest shareholders of Strive, a Bitcoin treasury company, according to CEO Cole Macro. The two firms collectively hold ASST shares valued at approximately $152.8 million, as confirmed by the company's latest
GateNews1h ago
Charles Schwab to Launch Bitcoin and Ethereum Trading, Releases Educational Content on BTC
Charles Schwab plans to expand into crypto, offering Bitcoin education and direct BTC/ETH trading, allowing customers to buy Bitcoin in accounts; analysts call it a major mainstreaming moment.
Schwab announces an expansion into cryptocurrency with Bitcoin education and direct BTC/ETH trading, enabling clients to hold Bitcoin in their accounts; analysts view this as a turning point toward mainstream adoption.
GateNews1h ago
U.S. Indo-Pacific Commander Highlights Bitcoin's Potential as 'Computer Science Tool'
Gate News message, April 21 — Admiral Samuel Paparo, commander of U.S. Indo-Pacific Command, testified before the Senate that Bitcoin demonstrates significant potential as a computer science tool and holds value as an instrument of power projection. Paparo stated that Bitcoin is a tangible reality w
GateNews2h ago
