Bitcoin Plunges 30% in 7 Days, Sparking Theories on Causes

Experts examine potential factors behind the dramatic cryptocurrency sell-off, from sovereign wealth fund liquidations to quantum security risks.

Published on Feb. 6, 2026

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Bitcoin experienced a dramatic 30% price drop this week, briefly falling to around $60,000. This sparked intense debate within the crypto community, with theories ranging from macroeconomic factors to potential systemic issues like forced selling, leverage unwinds, and concerns over quantum computing threats to Bitcoin's security.

Why it matters

The speed and force of the Bitcoin sell-off drew comparisons to the 2022 collapse of FTX, raising concerns about underlying vulnerabilities in the cryptocurrency market. Understanding the potential causes could provide insights into the future direction of Bitcoin and the broader crypto ecosystem.

The details

Several prominent traders pointed to signs of 'forced' selling, suggesting the downturn wasn't simply a natural market correction. Speculation centered on potential causes like sovereign wealth fund liquidations or a major exchange facing financial difficulties. Franklin Bi of Pantera Capital proposed a theory involving a large, Asia-based entity caught in a cascading unwind of leveraged positions on Binance. Beyond leverage, Charles Edwards of Capriole argued the price drop could force the industry to address Bitcoin's long-term quantum security vulnerabilities. Unusual activity surrounding BlackRock's spot Bitcoin ETF (IBIT), including record trading volume and options premium, also came under scrutiny, with a potential link to options-driven liquidations.

  • Bitcoin briefly fell to around $60,000 this week, a nearly 30% drop in just seven days.

The players

Flood

A well-known crypto trader who described the recent Bitcoin sell-off as the most aggressive selling he'd witnessed in years.

Franklin Bi

An analyst at Pantera Capital who proposed a theory involving a large, Asia-based entity caught in a cascading unwind of leveraged positions on Binance.

Charles Edwards

The founder of Capriole, who argued the Bitcoin price drop could force the industry to address the cryptocurrency's long-term quantum security vulnerabilities.

Parker White

An analyst at DeFi Development Corp. who noted record trading volume and options premium for BlackRock's spot Bitcoin ETF (IBIT), suggesting a possible link to a large options-driven liquidation.

BlackRock

The asset management firm that launched the IBIT spot Bitcoin ETF, which saw unusual trading activity during the recent market turmoil.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

The takeaway

The recent Bitcoin price volatility highlights the evolving risks within the cryptocurrency market, including the potential for systemic issues related to leverage, exchange vulnerabilities, and emerging threats like quantum computing. Investors should carefully consider their risk tolerance and diversify their portfolios to mitigate these risks.