Bitwise CIO Says Bitcoin Slide Is Not Jane Street’s Fault; It’s a Crypto Winter

Matt Hougan is a top money boss at Bitwise. He recently pushed back against the idea that a big trading firm called Jane Street caused Bitcoin to fall. He wrote on X, the social media site, on February 26 that the price drop is not a conspiracy. He called it a ‘classic crypto winter’ — a slow period when many coins lose value — not a planned attack by one firm.

People have been watching Bitcoin closely because it is trading well below its highest ever price. Right now, Bitcoin is down more than 46% from its all‑time high. This kind of drop often brings rumors and questions about whether big players are manipulating markets. This time, those questions came back as lawsuits and online threads revived old fears about market manipulation. But Hougan’s view is that the downturn comes from normal market moves, not a coordinated scheme.

Here is what sparked the debate. A bankruptcy administrator from the Terra project, a different blockchain system, has sued Jane Street in a Manhattan federal court. The lawsuit accuses Jane Street of using inside information before the Terra-Luna collapse in May 2022. Inside information means having secret knowledge that could help someone trade to make money before bad news becomes public.

According to the complaint, Jane Street took out 85 million units of TerraUSD, a stablecoin, from Curve’s 3pool just minutes after Terraform removed 150 million UST from circulation. The lawsuit says this sequence helped speed up the collapse, which was worth about $40 billion. Jane Street has denied the accusations. They call the case a desperate attempt to recover losses and blame Terra’s management for the failure.

At the same time, some crypto analysts, including a group called Bull Theory, have claimed that Jane Street runs a special selling program that starts at 10:00 a.m. local time (the so‑called ’10 AM’ sell algorithm). They say this would push Bitcoin prices lower and let Jane Street profit from related financial contracts, or derivatives.

There is more: India’s market regulator, the Securities and Exchange Board (SEBI), issued an temporary order that accuses Jane Street entities of manipulating expiry days on certain indexes between January 2023 and March 2025. This is still an ongoing case, and Jane Street has appealed the order.

Despite these claims, Hougan did not agree with the conspiracy idea. He wrote that the narrative about a single firm slipping into Bitcoin markets is not accurate. He argued that Bitcoin’s price drop happened because investors are undoing long bets, reducing leverage, and moving money into other places — things that often happen during big market cycles.

Hougan also highlighted new data from his colleague, André Dragosch, about how Bitcoin has behaved since the launch of a certain exchange-traded fund (ETF) in January 2024. Dragosch’s analysis does not support the idea of a big, sudden ’10 AM’ crash. Instead, it shows that weakness has appeared around midnight in Eastern Time, which means the weakness is happening during non‑U.S. trading hours. In other words, non‑U.S. markets might be the time when Bitcoin is most vulnerable, not a single U.S. trading hour per se.

Macro strategist Alex Krüger also shared a skeptical view. He called the Jane Street theory a viral and flawed conspiracy idea. He explained that important players in these markets — often called basis traders and authorized participants (APs) — simply work to close the gap between ETFs, futures, and the actual price of Bitcoin on the spot market. He warned that there are too many doomsday narratives looking for a single villain, especially when markets are weak. In his view, this is the kind of sentiment you see when prices have reached a bottom and people look for someone to blame.

Beyond blaming individuals, some people worry about how the financial system is built to work with ETFs. Jeff Park, the Chief Investment Officer at ProCap, wrote that the question is less about one firm and more about how APs operate under certain rules. Those rules let the funds create and redeem shares of an ETF in a process called in‑kind creation and redemption. Critics say this setup could reduce direct demand for the actual Bitcoin on the market, because some trading happens through these ETF structures instead of buying the real coins.

In simple terms, some people worry that big players use tools like futures contracts and ETF rules to manage risk without actually buying a lot of Bitcoin. They fear this could pull away demand from the real coin. But none of the lawsuits or regulatory papers so far shows coordinated wrongdoing in Bitcoin markets. The mix of large quantitative firms, how derivatives are used, and ETF mechanics does keep people curious and sometimes anxious during a downturn.

Despite all the controversy, Hougan offers a straightforward explanation. He says Bitcoin’s current behavior fits a long‑term pattern. It has a four‑year market cycle, which includes moments of high risk and then a reset where leverage goes down and investors change their minds about where to put money. He believes this is the normal cycle for Bitcoin and other cryptocurrencies. He writes: ‘This is a classic crypto winter and there will be a classic crypto spring. People want someone to blame — I get it — but the reality is far more boring than that.’

In short, while there are lawsuits and online theories about manipulation, the people who study the markets say there is no solid proof of a coordinated attack by Jane Street or any other single firm. The bigger picture shows a mix of long‑term market behavior, risk management, and how traders use ETFs and other tools. The Bitcoin price drop looks like a normal part of a difficult period in the market, not a planned scheme by one company.

This summary echoes what CryptoPotato reported: Bitwise CIO Matt Hougan rejects Jane Street blame for Bitcoin dip, pointing to deeper, market‑wide forces rather than a single villain. As the market watches and waits for what comes next, many investors expect a gradual recovery as the cycle turns and new money finds its way back into the market.

Definitions

• Bitcoin — Bitcoin is the first decentralized cryptocurrency created in 2009, built on a peer-to-peer network with a public ledger (blockchain) and secured by cryptography; it operates without a central authority.
• Exchange-traded fund — An exchange-traded fund (ETF) is a type of investment fund that is traded on stock exchanges, typically comprising a diversified portfolio of assets and designed to track an index or basket of assets.
• Jane Street — Jane Street Capital is an American multinational quantitative trading firm headquartered in New York, known for trading ETFs, equities, fixed income, derivatives, and other financial instruments.
• Terra (blockchain) — Terra is a blockchain protocol and payment platform that used algorithmic stablecoins, such as TerraUSD (UST); it collapsed in 2022 and the project filed for bankruptcy in 2024.
• Curve (DeFi) — Curve is a decentralized exchange liquidity protocol on Ethereum designed for stablecoins and low-slippage swaps, enabling efficient liquidity provision and trading.