No Black Swan: 4 Atypical Theories Behind Bitcoin's Oversold "Perpetrator"

Author: Nancy, PANews

The black swan-style crash has arrived, but we haven’t seen where the black swan is, which is even more unsettling.
Without any warning signs, Bitcoin suddenly plummeted, entering the third-largest oversold zone in history, with bullish account balances and psychological defenses simultaneously breaking down. What confuses the market is that this spiral decline cannot be traced to a clear trigger.
Although macro risks, the Fed’s hawkish expectations re-evaluation, liquidity tightening, and chain reaction liquidations from leverage also explain the downward trend, some atypical speculations are attempting to interpret the strange market behavior this time.

Speculation 1: Cross-market bloodshed triggered by Asian giants
Pantera Capital General Partner Franklin Bi posted a hypothesis that the behind-the-scenes driver of recent large-scale crypto sell-offs is not a crypto-focused trading firm, but a major Asian entity outside the crypto circle. This entity has limited crypto trading counterparties, so it has gone unnoticed by the crypto community.
According to Franklin Bi, this entity engaged in leverage trading and market making on Binance → closing yen arbitrage positions → extreme liquidity crisis → approximately 90-day grace period → failed attempts to recover through gold/silver trading → forced liquidation this week.
In other words, this is a cross-market leverage mismatch “bloodshed” caused by traditional financial risk spillover. In fact, yen arbitrage positions are a significant source of global liquidity. Investors have historically relied on zero-cost yen borrowing, converting to USD to chase high-yield assets in arbitrage games. But as the yen enters a rate hike cycle and Japanese government bond yields soar, these rules are broken, and Bitcoin, being one of the most liquidity-sensitive assets globally, often becomes the “first stop” for withdrawal of arbitrage funds.
This hypothesis seems plausible, as Bitcoin’s decline was particularly sharp and rapid during Asian trading hours.

DeFi Dev Corp Chief Investment Officer Parker White also believes, this is a cross-market liquidity stampede.
White posted that yesterday (February 5), BlackRock’s IBIT trading volume reached $10.7 billion, nearly double the previous record, with options premiums around $900 million, also a record. IBIT has become the leading venue for Bitcoin options trading. Coupled with the simultaneous decline of BTC and SOL and subdued CeFi market liquidations, he suspects that the volatility was caused by a major IBIT holder facing forced liquidation.
He further analyzed that many funds based in Hong Kong have most or even 100% of their assets in IBIT, a single-asset structure typically designed to utilize isolated margin mechanisms. The involved funds may have used yen financing to engage in high-leverage options trading. Under the dual pressure of accelerated yen arbitrage position liquidations and silver plunging 20% today, these institutions tried to leverage up to recover previous losses but failed, ultimately collapsing due to a liquidity crunch.
Since such funds are often non-native crypto entities with no on-chain counterparties, their risks had not been previously detected by the crypto community. However, he also revealed that the sharp decline in the net asset value of some related Hong Kong funds today has already shown signs of trouble.
Combining White’s analysis with past 13F disclosures, the family office Avenir Group founded by Li Lin is currently Asia’s largest Bitcoin ETF holder, with 18.29 million IBIT shares, accounting for 87.6% of its portfolio. Other holdings include Yu Rong (Hong Kong) Assets, Ovata Capital, Monolith Management, and Andar Capital Management, which also hold Bitcoin spot ETFs but in smaller amounts.
Although the clues point to a clear direction, White emphasizes that this is still in the speculation stage. Since 13F reports are delayed, relevant holdings data is not expected until mid-May. He also warns that if brokerages fail to complete liquidations in time, potential vulnerabilities on their balance sheets could be hard to conceal.

Speculation 2: US/UK seizure and sale of large amounts of Bitcoin
Recent rumors about multiple governments potentially selling seized Bitcoin have been fermenting within the crypto community.
In the US, in January this year, the US military arrested Venezuelan President Maduro. Due to Venezuela’s long-standing economic crisis and international sanctions, there is speculation that the country secretly built a “shadow reserve” of up to 600,000 BTC, prompting discussions about whether the US has already seized these assets. However, there is currently no on-chain evidence supporting Venezuela’s reserve Bitcoin claim.
Another concern stems from last October, when Prince Group founder Chen Zhi was arrested by the US, and approximately 127,000 BTC (worth about $15 billion at the time) was frozen and confiscated — the largest crypto asset seizure in US history. Notably, US Treasury Secretary Scott Bessent recently confirmed that the US government will retain the Bitcoin obtained through asset forfeiture.
Meanwhile, across the Atlantic, the UK’s actions also attract attention. In November last year, UK police uncovered the largest Bitcoin money laundering case in UK history, arresting Qian Zhiming and seizing 61,000 BTC.
Although the seized Bitcoin by the US and UK represents a huge potential selling pressure, there is currently no on-chain evidence of large transfers or OTC sales.

Speculation 3: “Deep-pocket” funds exhausted, liquidity feedback loop
Large institutions historically seen as “deep pockets” (such as sovereign wealth funds, giant pension funds, large investment groups, etc.) are now facing liquidity constraints and are forced to sell assets to free up cash.
This shift stems from the fact that the past decade’s prosperity was built on low inflation, low interest rates, and high liquidity, but this macro environment has reversed, and liquidity is no longer abundant.
In a high-interest-rate environment, funding gaps are increasingly being addressed through asset liquidation. Over recent years, large amounts of capital have been allocated to private equity, real estate, infrastructure, and other illiquid assets. According to Invesco, sovereign wealth funds’ average allocation to illiquid alternative assets is projected to reach 23% by 2025. These assets are difficult to liquidate quickly, making liquidity management a strategic priority.
At the same time, a new wave of capital expenditure is accelerating. Especially as AI has evolved into a costly global arms race, requiring ongoing, stable, and large-scale cash support with strategic and long-term commitments. It is reported that by 2025, sovereign wealth funds will invest up to $66 billion in AI and digitalization-related sectors, posing a real challenge to any institution’s cash flow.
In this context, institutions tend to prioritize assets with uncertain short-term prospects, high volatility, or easier to sell, such as underperforming tech stocks, crypto assets, and hedge fund shares. As more forced sellers appear in the market, liquidity tension shifts from individual institutions to systemic pressure, ultimately creating a negative feedback loop that suppresses the overall performance of risk assets.

Speculation 4: Crypto OGs “flee”
Bitwise CEO Hunter Horsley believes that crypto natives and OGs are anxious due to falling prices and are choosing to sell, even though they have experienced similar moments countless times over the past decade. Conversely, institutional investors, wealth managers, and investment professionals are quite happy. They finally get to re-enter at prices missed two years ago or even at 50% discounts compared to four months ago.
Crypto influencer Ignas also said that crypto natives are selling now because they expect a 1929-style crash. We are all watching Ray Dalio warn that the long cycle is ending; we see posts about the AI bubble; we observe similar unemployment data and panic about a “Third World War”… The result is that the S&P 500 hasn’t crashed, but the crypto market has already collapsed. Essentially, we are throwing assets at each other. Ultimately, we are just emotional traders, trading in tandem with each other.
This long-standing state of online activity has indeed made us earlier than others in NFT, MEME coins, Vibe coding, and similar areas. But it also means that crypto natives tend to trade in the same direction at the same time — FOMO together, panic-selling together.
Baby boomers and institutional investors don’t spend 14 hours a day scrolling crypto Twitter; they just hold their positions.

Ignas also said that he initially thought ETF involvement would bring different types of holders with different time horizons. But the reality is otherwise. The crypto market is still dominated by retail investors. We think of ourselves as contrarian investors. But when every contrarian holds the same argument, it becomes consensus. Maybe the next cycle will be different.

In fact, Bitcoin OGs are considered one of the main reasons for the ongoing price pressure, especially with multiple Satoshi-era wallets activating last year, transferring tens of thousands of BTC. However, these transfers are not entirely for selling pressure; they could be for address upgrades or custody rotations. Still, objectively, they have increased market panic. According to recent analysis by Cryptoquant analyst DarkFrost, selling pressure from OG holders has significantly decreased, and the current trend leans more toward holding.