Bitcoin Plummets to $60,000: Traders Search for Causes Behind the Crash
By John Nada·Feb 6, 2026·2 min read
Bitcoin's sharp drop to $60,000 has traders speculating about hidden fund blowups and market dynamics, raising concerns about future stability.
Bitcoin’s recent plunge to nearly $60,000 has traders scrambling for explanations, with theories swirling about hidden fund blowups and market dynamics. According to CoinDesk, this nearly 30% drop over seven days marks the asset's worst single-day performance since the FTX crash in 2022. Prominent crypto trader Flood described the selling as the most vicious he's seen in years, suggesting that it felt 'forced' and 'indiscriminate.' Traders on X have floated various theories to explain the selloff, including potential sovereign dumping and issues related to exchange balance sheets.
Pantera Capital's Franklin Bi speculated that a large Asia-based player with limited crypto-native counterparties might be behind the selling, making it difficult for the market to identify them quickly. He highlighted a series of events starting with leverage on Binance that worsened as carry trades unwound, culminating in a liquidity crisis that forced the recent selloff. Meanwhile, Charles Edwards from Capriole pointed to quantum security risks as a significant factor, suggesting that falling prices could prompt serious attention to these vulnerabilities. He mentioned that price drops might be necessary to incentivize meaningful action in the realm of Bitcoin's security.
Additionally, Parker White, COO and CIO at DeFi Development Corp., noted unusual activity in BlackRock's spot bitcoin ETF (IBIT) as a possible contributor to the market's turmoil. He observed that IBIT experienced its biggest trading volume day, arguing the pattern might indicate a large options-driven liquidation.
As traders grapple with the ramifications of this sharp decline, market sentiment is shifting dramatically. With altcoins under pressure and liquidity appearing thin, many are treating any rebounds with skepticism. The plunge back toward levels last seen in late 2024 underscores a broader concern about market stability and the potential for further drops. This situation highlights the fragility of current market dynamics and the necessity for investors to remain vigilant as they navigate the turbulent crypto landscape.