Bitcoin's (CRYPTO: BTC) historic sell-off that bottomed at $60,000 was not driven by crypto panic or ETF buyers exiting their position, but rather by forced deleveraging in traditional markets.
How Deleveraging In Stocks Influenced Crypto Prices
According to Bitwise Invest advisor Jeff Park, Bitcoin has become highly correlated with software stocks and other risk assets, which were hit during a statistically extreme drawdown for multi-strategy funds.
As risk managers moved to rapidly de-gross portfolios, selling pressure spilled into Bitcoin via ETFs.
BlackRock's iShares Bitcoin Trust ETF (NASDAQ:IBIT) saw record spot and options volume, largely dominated by put activity.
Park noted this signaled hedging and dealer-driven flows rather than outright long-only selling.
Despite the price drop, ETF flows were unexpectedly positive, suggesting most of the selling came from hedged, market-neutral strategies such as CME basis trades and relative-value positions.
As these trades unwound, the Bitcoin futures basis spiked sharply, confirming forced de-risking by large multi-asset funds.
Park added that widespread short gamma exposure, amplified by structured products, knock-in barriers, and cheap put selling during low-volatility conditions, accelerated the downside as dealers were forced to sell into weakness.
Why This Move Changes Everything
The rebound on Feb. 6 reflected market-neutral traditional finance players re-entering and stabilizing ETF flows, while crypto-native leverage remained compressed.
Park concluded that Bitcoin's deep integration into global capital markets means stress in traditional finance can drive violent short-term moves, but this episode did not signal structural ETF outflows or long-term investor capitulation.
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