Bitcoin’s sharp decline toward $60,000, marking a nearly 30% drop over the past week, has triggered widespread speculation among traders and analysts that the sell-off may have been driven by a large, forced liquidation rather than routine macro or risk-off positioning.The move represents Bitcoin’s most severe bout of selling since the 2022 FTX collapse, with market participants on X pointing to a growing “narrative vacuum” as prices fell rapidly through key technical levels.Forced selling theories gain tractionSeveral traders described the sell-off as unusually aggressive and indiscriminate. Crypto trader Flood said the price action appeared “forced,” suggesting possibilities ranging from a sovereign entity selling billions of dollars’ worth of Bitcoin to a major exchange-related balance sheet failure.A more detailed hypothesis was put forward by Pantera Capital general partner Franklin Bi, who suggested the seller may not have been a crypto-native firm.According to Bi, the liquidation could involve a large Asia-based institution with limited crypto-native counterparties, which may explain why on-chain analysts and crypto traders did not detect stress earlier. He outlined a potential chain reaction involving leveraged positions on Binance, a Japanese yen carry trade unwind, deteriorating liquidity, and a failed attempt to recover losses through gold and silver trades before a forced Bitcoin liquidation accelerated this week.IBIT activity raises options-driven unwind questionsOthers pointed to unusual activity in BlackRock’s spot Bitcoin ETF as a possible factor.DeFi Development Corp. COO and CIO Parker White noted that BlackRock’s iShares Bitcoin ETF (IBIT) recorded its highest-ever daily trading volume of $10.7 billion, alongside a record $900 million in options premium.White argued the pattern more closely resembles a large, options-driven liquidation than a typical crypto leverage unwind. He also pointed to stress in Hong Kong–linked funds, suggesting a leveraged IBIT options strategy—potentially funded with yen borrowing—may have unraveled as volatility spiked and funding costs rose.“I have no hard evidence here, just some hunches and bread crumbs,” White said, adding that the scenario appeared plausible given the scale and speed of the move.Security concerns re-emerge amid falling pricesBeyond leverage and liquidity, the sell-off has revived longer-term concerns around Bitcoin’s security model.Charles Edwards, founder of Capriole Investments, said falling prices may finally force meaningful attention on Bitcoin’s quantum security risks, an issue he has warned about previously.Edwards argued that lower prices could act as a catalyst for coordinated investment in quantum-resistant upgrades, adding that liquidity thinning and collapsing sentiment may create conditions for more serious discussion across the ecosystem.Market impact and outlookBitcoin’s recent decline has been characterized by sudden air pockets and sharp intraday swings, replacing the orderly dip-buying seen earlier in the year. The move has pushed BTC back toward levels last seen in late 2024, while liquidity across major venues has appeared thin.Altcoins have come under heavier pressure, and market sentiment has fallen to levels comparable to the post-FTX period. Until ETF flows, derivatives positioning, and funding markets stabilize, traders say rebounds are likely to be treated with caution rather than conviction.
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