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Source: Fortune.com
Summary
Bitcoin’s price fell nearly $15,000 in 24 hours, with some attributing the crash to Hong Kong traders who placed high-leverage Bitcoin bets that went wrong. According to Parker White, a former equities trader and COO at DeFi Development Corporation, evidence points to the sudden implosion of Hong Kong hedge funds that held call options in BlackRock’s IBIT, the world’s biggest Bitcoin ETF. The funds used the Yen carry trade to finance big positions in out-of-the-money IBIT options, which declined in value as the crypto market slumped. The hedge funds were liquidated, forcing a mass sell-off of IBIT shares and a calamitous fall for Bitcoin.
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Parker White, a former equities trader, suggests that Hong Kong hedge funds placed high-leverage Bitcoin bets that went wrong. According to White, the funds used the Yen carry trade to finance big positions in out-of-the-money IBIT options, which declined in value as the crypto market slumped. The hedge funds were liquidated, forcing a mass sell-off of IBIT shares and a calamitous fall for Bitcoin. The episode has left even longtime crypto insiders asking what happened. White’s theory is supported by other circumstantial evidence, including a recent decision by the Securities and Exchange Commission to lift limits on trading Bitcoin options.
The announcement sounds familiar. This is not the first time a market crash has been attributed to a single event or a group of events. The crypto market is known for its volatility, and major crashes have typically been touched off by multiple factors, not a single event.
