Bitcoin Wicks to $60K as $2.6B Evaporates; Market Hunts for ‘Blowup’ Fund
Bitcoin’s plunge to $60K triggered $2.6B in liquidations, fueling rumors of a Hong Kong fund blowup as BlackRock’s IBIT sees record volume.
The Liquidity Vacuum
Bitcoin capitulated overnight, wicking down to $60,255 before stabilizing near $64,000. The move obliterated $2.65 billion in leveraged positions over 24 hours, the largest flush since late 2024. This wasn’t a correction; it was a forced liquidation cascade that shaved 6% off the global crypto market cap in hours. When the order book thins out this violently, the market stops trading on fundamentals and starts trading on fear.
The ‘HK Fund’ Theory
The severity of the crash has triggered a manhunt for a distressed entity. Parker White, CIO at DeFi Dev Corp, flagged a specific catalyst: the implosion of leveraged option positions held by non-crypto hedge funds in Hong Kong. The theory suggests these funds used BlackRock’s IBIT as a high-beta vehicle and were forced to unwind billions in margin exposure as yen-funding costs spiked. While unconfirmed, the thesis aligns with the specific flow toxicity seen during Asian trading hours.
ETF Volume: Capitulation, Not Accumulation
BlackRock’s IBIT didn’t just see activity; it saw a fire sale. The ETF logged a record $10 billion in daily volume, a figure analysts interpret not as fresh institutional entry, but as defensive repositioning and capitulation. Market data indicates heavy activity in protective puts, suggesting that traditional finance (TradFi) players are hedging against a deeper drawdown rather than buying the dip.
“The sharp price drop looks like a perfect storm: forced liquidations from over-leveraged longs, ETF outflows, and a risk-off macro backdrop.”, Vincent Liu, Kronos Research
Miner Capitulation Signs
The sell-side pressure isn’t limited to derivatives. On-chain sleuths spotted Marathon Digital (MARA) moving approximately 288 BTC ($26.3M) to market maker Wintermute, part of a larger $87 million shuffle onto trading desks. When large-scale miners begin moving inventory to exchanges during a 30% weekly drawdown, it signals that even the staunchest holders are being forced to cover operational costs into thin liquidity.
Sentiment at Rock Bottom
The Crypto Fear & Greed Index collapsed to 9 (Extreme Fear), a reading last seen during the FTX collapse. Traders are no longer asking “how high”; they are waiting to see which fund’s insolvency letter drops first.
