 ▲ Bitcoin (BTC) |
An analysis has emerged suggesting that Bitcoin’s sharp decline was not the result of market manipulation by a specific institution, as some conspiracy theories claim, but rather an inevitable consequence of excessive leveraged investment.
According to cryptocurrency-focused outlet U.Today on March 2 (local time), Galaxy Research firmly refuted claims that selling pressure from Jane Street played a decisive role in the recent plunge in Bitcoin’s price. Alex Thorn, head of research at Galaxy Research, diagnosed the downturn as stemming from overheating in the futures market and massive liquidations rather than manipulation by any specific firm.
Thorn pointed out that just before Bitcoin’s price fell, open interest in the futures market had reached an all-time high, leaving the market in an extremely fragile state. As prices began to correct, approximately $600 million in long positions betting on further gains through leverage were liquidated in a short period, accelerating the decline uncontrollably. He explained that Jane Street’s trades were merely part of broader market activity and should not be viewed as the fundamental cause of the crash.
Galaxy Research analyzed that individual investors and some institutions, swept up in bullish sentiment, had weakened the market’s resilience by investing with excessive borrowing. In a market heavily skewed to one side, even minor negative news can trigger chain reactions and expose structural vulnerabilities that lead to sharp price drops. Thorn emphasized, “This incident was simply the bursting of excesses that had built up within the market; there is no evidence that Jane Street orchestrated it behind the scenes.”
The spread of conspiracy theories during periods of heightened volatility in the digital asset market is often driven by investors’ psychological tendency to seek external causes for their losses. However, actual data indicates that excessive greed and leverage are the primary culprits behind market collapses. Despite Bitcoin’s integration into institutional finance following the launch of spot ETFs, the speculative nature of the futures market continues to pose significant downside risks.
This analysis once again underscores the importance for digital asset investors of closely monitoring technical indicators and overall market liquidity conditions. Galaxy Research stated that it will continue to correct distorted information in the market and provide investors with accurate insights based on objective data. The future recovery of the Bitcoin market will depend on the extent to which excesses in the futures market are cleared and whether genuine buying demand flows back in.
Disclaimer: This article is for investment reference only and the publisher is not responsible for any investment losses incurred based on it. The content should be interpreted solely for informational purposes.