{"id":21552,"date":"2026-02-08T16:02:57","date_gmt":"2026-02-08T16:02:57","guid":{"rendered":"https:\/\/bitunikey.com\/news\/what-caused-the-feb-5-crypto-crash-bitwise-advisor-explains\/"},"modified":"2026-02-08T16:03:09","modified_gmt":"2026-02-08T16:03:09","slug":"what-caused-the-feb-5-crypto-crash-bitwise-advisor-explains","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/what-caused-the-feb-5-crypto-crash-bitwise-advisor-explains\/","title":{"rendered":"What caused the Feb 5 crypto crash? Bitwise advisor explains"},"content":{"rendered":"<p><\/p>\n<div class=\"post-detail__content blocks\">\n<p class=\"is-style-lead\">Bitwise advisor Jeff Park attributed the February 5 crypto selloff to multi-asset portfolio deleveraging rather than crypto-specific factors.<\/p>\n<div id=\"cn-block-summary-block_0f19b711557a0560807879e20b59b10f\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>February 5 selling was driven by multi-asset fund deleveraging, not crypto-native fear.<\/li>\n<li>CME basis trades unwound violently as pod shops de-grossed across portfolios.<\/li>\n<li>Short gamma and structured product hedging amplified downside despite ETF inflows.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>IBIT recorded 10 billion in trading volume, doubling its previous high, while options activity hit historic levels led by put contracts rather than calls.<\/p>\n<p>The crash saw Bitcoin (BTC) fall 13.2% yet IBIT posted $230 million in net creations with 6 million new shares, bringing total ETF inflows above $300 million.<\/p>\n<p>Goldman Sachs\u2019 prime brokerage desk reported February 4 was one of the worst daily performances for multi-strategy funds with a z-score of 3.5. This was a 0.05% probability event 10 times rarer than a three-sigma occurrence.<\/p>\n<p>Park wrote that risk managers at pod shops forced indiscriminate de-grossing, explaining why February 5 turned into a bloodbath.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h2 class=\"wp-block-heading\">CME basis trade unwinding drove violent deleveraging<\/h2>\n<p>Park <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/x.com\/i\/article\/2020133980394151936\" target=\"_blank\" rel=\"nofollow\">identified<\/a> the CME basis trade as a primary driver of selling pressure. The near-dated basis jumped from 3.3% on February 5 to 9% on February 6, one of the largest moves observed since ETF launch.<\/p>\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\">\n<div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"zxx\" dir=\"ltr\"><a rel=\"nofollow\" target=\"_blank\" rel=\"nofollow\" href=\"https:\/\/t.co\/dvhDRKa1Gm\">https:\/\/t.co\/dvhDRKa1Gm<\/a><\/p>\n<p>\u2014 Jeff Park (@dgt10011) <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/twitter.com\/dgt10011\/status\/2020167690560647464?ref_src=twsrc%5Etfw\" target=\"_blank\" rel=\"nofollow\">February 7, 2026<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n<p>Multi-strategy funds like Millennium and Citadel hold large positions in the Bitcoin ETF complex and were forced to unwind basis trades by selling spot while buying futures.<\/p>\n<p>IBIT showed tight correlation with software equities rather than gold over recent weeks. Gold is not typically held by multi-strategy funds as part of funding trades, confirming that drama centered on these funds rather than retail investment advisors.<\/p>\n<p>The catalyst originated from software equity selloffs rather than crypto-native selling.<\/p>\n<h2 class=\"wp-block-heading\">Structured products created crypto bloodbath<\/h2>\n<p>Structured products with knock-in barrier features contributed to selling acceleration. A JPMorgan note priced in November carried a barrier at $43,600.<\/p>\n<p>Notes priced in December when Bitcoin dropped 10% would have barriers in the $38,000-$39,000 range.<\/p>\n<p>Put buying behavior in crypto-native markets over preceding weeks meant crypto dealers held naturally short gamma positions.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<p>Options were sold too cheaply relative to outsized moves that eventually materialized, worsening the downside. Dealers held short gamma on puts from the $64,000-$71,000 range.<\/p>\n<p>February 6 recovery saw CME open interest expand faster than Binance. The basis trade partially recovered, offsetting outflow effects while Binance open interest collapsed.<\/p>\n<p>Park concluded that tradfi derisking was the catalyst that pushed Bitcoin to levels where short gamma hedging ramped up declines through non-directional activity requiring additional inventory.<\/p>\n<\/p><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bitwise advisor Jeff Park attributed the February 5 crypto selloff to multi-asset portfolio deleveraging rather than crypto-specific factors. Summary February 5 selling was driven by multi-asset fund deleveraging, not crypto-native&hellip;<\/p>\n","protected":false},"author":1,"featured_media":2316,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-21552","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/21552","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=21552"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/21552\/revisions"}],"predecessor-version":[{"id":21553,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/21552\/revisions\/21553"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/2316"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=21552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=21552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=21552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}