Bitcoin plunge fuels community rumors of a “major entity bankruptcy”

Uk Jin

Summary

Bitcoin (BTC) plunged to around $60,000, with FUD tied to a potential major entity bankruptcy spreading in online communities.
Trader Flood called the move “the most brutal selloff in years,” raising the possibility of state-level actors or a major exchange bankruptcy.
Franklin Bi, a partner at Pantera Capital, said the backdrop could include unwinding yen carry trades, a collapse in leveraged positions, and heavy trading in spot Bitcoin ETFs and options contributing to a liquidity crunch.

Bitcoin (BTC) sank intraday to as low as around $60,000, with FUD (fear, uncertainty and doubt) related to a major entity’s bankruptcy spreading across online communities.

According to CoinDesk, a digital-asset media outlet, trader Flood said on X (formerly Twitter) on the 6th (Korea time) that “(judging by today’s decline) it’s the most brutal selloff in years,” adding that “it looks like forced, indiscriminate selling.”

He went on to claim that, given the scale of the selling pressure, state-level actors such as Saudi Arabia, the United Arab Emirates (UAE), Russia and China may have carried out the sales, and that bankruptcy is also possible due to a deterioration in the financial structure of a major exchange.

Another view suggested the seller could be a large Asia-based investor. Franklin Bi, a partner at Pantera Capital, wrote on X that “the seller may not be a digital-asset-focused trading firm, but a large institution with little exposure to digital assets,” adding that a liquidity crunch may have emerged as yen-based carry trades were unwound and leveraged positions collapsed.

Separately, some also pointed to large trades in the spot Bitcoin exchange-traded fund (ETF) and options markets as a possible backdrop to the day’s sharp decline.

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