Was Jane Street behind the bitcoin crash? A deep dive into why that theory may not not hold

Bitcoin BTC$68,056.93 has dropped like clockwork every morning after the New York market open since late 2025, and crypto fans on X are accusing Jane Street for causing it.

A theory on X has gotten retail participants pointing to the firm for single-handedly driving the asset from $125,000 to $62,000 in recent months.

However, market data and inner workings of an exchange-traded fund (ETF) authorized participant like Jane Street suggest otherwise, observers have noted.

CoinDesk reached out to Jane Street for comment on BTC allegations and did not receive a reply as of European morning hours.

The allegations

The claim, spread across dozens of viral posts, goes something like this: Jane Street, one of the world’s largest trading firms, was systematically selling bitcoin at 10 a.m. ET every day to push prices lower and then snap up ETFs cheaply.

“BTC has been consistently dumping ~2-3% within minutes of the U.S. cash open (10 a.m. ET) almost every trading day since early November. Many traders point to Jane Street’s massive $2.5B+ position in BlackRock’s IBIT as the likely driver: engineered liquidity sweeps to accumulate spot ETFs at a discount,” Whale Factor, a widely-followed X account said in December.

The recent 13/F filings revealed that Jane Street held roughly $790 million in IBIT shares as of the fourth quarter of 2025.

Jan Happel and Yann Allemann, the co-founders of blockchain analytics firm Glassnode, have also documented these patterns through their shared X account Negentropic and said Wednesday: “Jane street Lawsuit gets made public, and miraculously the 10am $btc slam disappears.”

The allegations have exploded this week, after the firm was sued by TerraForm Labs’ bankruptcy operator for insider trading that hastened Terra’s demise in 2022. If that’s not enough, the 10 a.m. volatility has vanished in the wake of the lawsuit. Bitcoin surged by over 6% to nearly $70,000 on Wednesday.

In June last year, India’s SEBI banned Jane Street from local markets and froze $566 million in alleged illegal gains, citing a “morning pump, afternoon dump” scheme manipulating the Bank Nifty index on 18 derivatives expiry days from January 2023 to March 2025. The accusations, therefore, suggest Jane Street’s reputation precedes it.

Market data and logic suggest otherwise

The conspiracy that Jane Street has been secretly driving prices lower to snap up IBIT cheap could be challenged, however, using data tracked by crypto economist Alex Kruger, which doesn’t confirm the 10 a.m. dump.

The IBIT ETF has posted cumulative gains of around 0.9% in the 10:00-10:30 ET window; meanwhile, returns in the first 15 minutes have been -1%, according to Kruger. That’s noisy data, not evidence of systematic dumping, Kruger said on X.

More importantly, both windows closely mirror Nasdaq performance, Kruger added, which means the so-called “10 a.m. dump” was a part of broad risk-asset repricing, not Jane Street foul play.

Jane Street, it should be pointed out, isn’t a rogue operator with unfettered power over bitcoin, but a single player — an authorized participant (AP) — in a regulated ecosystem designed to ensure smooth trading of the ETFs.

“No single firm sits at a terminal pressing “dump Bitcoin.” But the structure itself—the ETF architecture, the AP exemptions, the shift to in-kind creation—creates a grey window where price discovery can be muted without anyone breaking rules,” Yale ReiSoleil, chief technology officer of Untrading, an Ethereum-based financial infrastructure firm, said on X.

Spot ETFs are funds that track bitcoin’s spot price while holding actual coins in custody. Their shares trade on the stock exchange and their prices tend to drift away from the underlying asset’s net asset value (NAV) depending on the demand and supply.

APs like Jane Street, JPMorgan and Citadel Securities are tasked with creating new ETF shares with demand spikes and redeem when demand falls to ensure the ETF price remains tethered to the NAV.

In the case of bitcoin ETFs, APs are allowed “in-kind” creation and redemption, where they can swap a basket of actual BTC directly with the issuing company, rather than just cash. These dynamics, which are legal and not manipulation, could have led to 10 a.m. volatility.

Short first, buy later

On a typical day, when BTC rises during the Asian and European hours, demand for ETFs spikes in early U.S. hours. This temporarily pushes the ETF price above its NAV. The APs then respond by increasing the supply of shares — sometimes by shorting shares they don’t have — to meet buyer demand and keep trading smooth.

Normally, shorting requires borrowing shares first, which costs money (like loan interest), but regulators have exempted APs from that rule.

Later, when they create new shares, they don’t rush to buy spot BTC right away and often source it privately through an over-the-counter shop. They then short futures or buy put options to hedge the long exposure from creating new shares.

These things combined can inject temporary downside pressure in the market.

“APs can short IBIT without borrowing costs, thanks to a Reg SHO carve-out. They can hedge that short with futures instead of spot. That means the natural arb that should close the gap between ETF price and NAV never happens, because the AP never buys spot,” ReiSoleil explained.

“Meanwhile, in-kind creation lets them source bitcoin privately, OTC, at their own pace. The spot market never sees the buy pressure. The beginning looks like market-making. The end looks like market-making. The middle is where the integrity of price discovery goes to die,” he added.

Kruger agreed that Jane Street conspiracy theories are typical of the doom-laden sentiment that often emerges after prolonged bitcoin downtrends.

He firmly disagreed with the allegation that the “short first and buy later” mechanics employed by APs temporarily suppress the price.

“Whether the spot is bought by the AP or the basis trader, the net demand on BTC spot is identical,” he said, arguing that the notion that hedging with futures first (and delaying immediate spot buys) somehow compromises the integrity of price discovery is simply incorrect.

Jane Street has not commented publicly, and no onchain data or exchange records have surfaced tying the firm to a coordinated campaign to push bitcoin lower.