Bitcoin plunged over 40% in February 2026, dropping below $60,000 and marking a decline of more than 50% from its October 2025 peak near $126,200. Analysts attribute the crash to potential forced selling from Hong Kong hedge funds and U.S. bank structured products linked to Bitcoin ETFs. This significant correction brings Bitcoin’s price close to the estimated net production cost for miners, raising concerns about potential miner capitulation.
Bitcoin’s major sell-off has analysts pointing to potential causes in Hong Kong and U.S. financial markets. According to one theory, Hong Kong hedge funds using leveraged bets linked to Bitcoin ETFs were forced to sell assets like BTC when their yen-funded trades reversed. The high cost of borrowing Japanese yen reportedly exacerbated their losses.
Another theory from former BitMEX CEO Arthur Hayes suggests U.S. banks like Morgan Stanley may have been forced to sell Bitcoin to hedge their exposure to structured notes tied to spot ETFs. He suggested that banks, including Morgan Stanley, may have been forced to sell Bitcoin (or related assets) to hedge their exposure in structured notes tied to spot Bitcoin ETFs, such as BlackRock’s IBIT.
A third, less prominent, factor being discussed is a shift of Bitcoin miners to the artificial intelligence sector. Analyst Judge Gibson stated in a post on X that demand for AI data centers was prompting a mining exodus, leading to a 10-40% drop in hash rate.
The recent price decline is pushing Bitcoin closer to miners’ cost thresholds. The estimated average electricity cost to mine one Bitcoin is now around $58,160, with net production expenditure near $72,700. This is causing financial strain, signaled by the Hash Ribbons indicator, where the 30-day hash-rate average fell below the 60-day average.
