From Terra's Collapse to the "10 AM Smash": How Jane Street Played Both Continents' Markets?

Source:@peruvian_bull

Compiled by｜Odaily; Translator｜ Ethan（@ethanzhang_web 3）

Editor's Note: Over the past four months, Bitcoin has almost established a fixed rhythm—every time the U.S. stock market opens, it faces a wave of significant selling pressure. It rises during Asian hours, continues its upward trend in Europe, but quickly falls back as soon as New York opens. Traders call it the "10 AM Smash." This force acts like an invisible structural headwind, repeatedly liquidating leveraged positions, dampening market sentiment, and gradually wearing down investors' patience.

However, when the lawsuit documents targeting Jane Street were officially made public, this months-long rhythm was suddenly broken. Is this just a coincidence, or a signal of deeper structural changes? How did the entire process unfold? Odaily provides a full compilation below.

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The most powerful trading firm you've never heard of has just been caught red-handed. Twice, on two different continents. And Bitcoin, it seems, has finally breathed a sigh of relief because of it.

Jane Street Group is a quantitative trading firm headquartered in New York. They have no CEO.

According to their own description, they operate like an "anarchist commune." In the first nine months of 2025, they achieved net trading revenue of $24 billion, already surpassing the $20.5 billion for the entirety of 2024. The second quarter of 2025 alone reached $10.1 billion, the highest single-quarter trading revenue in Wall Street history.

By any measure, they are the world's most profitable trading institution.

And just this week, the Terraform Labs bankruptcy administrator filed a lawsuit in Manhattan federal court, accusing Jane Street of using insider information to front-run the May 2022 collapse of Terra Luna. That collapse wiped out $40 billion in market value and triggered a chain reaction that ultimately brought down Celsius, Three Arrows Capital, and FTX.

The allegation is stunningly simple. On May 7, 2022, Terraform Labs quietly withdrew $150 million in UST from Curve3pool, a major decentralized liquidity pool. No public announcement, just a silent withdrawal of liquidity.

Ten minutes later, a wallet linked to Jane Street withdrew $85 million from the same pool. Just ten minutes...

The complaint alleges that a former Terraform intern, Bryce Pratt, after becoming a full-time employee at Jane Street in September 2021, established private communication channels with former colleagues and is suspected of directly passing material non-public information about Terraform's liquidity movements to Jane Street's trading team.

The complaint names four defendants: Jane Street Group LLC, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

The administrator's statement gets straight to the point: The trades conducted by Jane Street would have been impossible to execute without the exclusive insider information they possessed.

Making matters worse, the complaint alleges that Jane Street's withdrawal helped trigger the de-pegging of UST, plunging the entire Terraform ecosystem into a death spiral. LUNA fell from over $80 to near zero. $40 billion evaporated. Ordinary investors lost everything. Pensions, education funds, life savings—gone in days.

Jane Street's response? Calling the allegations "desperate and baseless."

But the problem is, this isn't the first time.

In July 2025, the Securities and Exchange Board of India (SEBI) brought one of the largest market manipulation charges in the country's history against Jane Street. The investigation found that over 18 derivatives expiry days between January 2023 and March 2025, Jane Street executed a textbook pump-and-dump operation on the Bank Nifty index.

The operation was extremely mechanical:

Morning: Jane Street's algorithms aggressively bought component stocks and futures, pushing the index up 1% to 1.3%. On some trading days, SEBI determined that the entire positive movement of the index came from Jane Street.

Simultaneously, they built massive short option positions, primarily selling call options and buying put options, at a scale far exceeding their stock holdings. SEBI determined that, on a delta-equivalent basis, the option position size was 7.3 times that of the spot and futures positions. This wasn't hedging, nor was it arbitrage; it was packaged directional manipulation.

Afternoon: They reversed course, selling the stocks bought in the morning. The index fell, and the short options profited. This cycle repeated on each expiry day.

SEBI assessed illegal profits at 484.3 billion rupees, approximately $580 million, and described their actions as "a mechanism deliberately designed to manipulate the settlement price." The regulator also noted that even after the National Stock Exchange issued a clear warning in February 2025, Jane Street continued to execute the strategy.

SEBI's wording was unusually harsh: "Market integrity and the trust of millions of small and medium investors and traders can no longer be held hostage by such non-credible actors."

Jane Street was barred from the Indian securities market, has deposited over $560 million into an escrow account, and has appealed. As of now, the case is still being heard by the Securities Appellate Tribunal of India.

Now, back to Bitcoin.

Since November 2025, Bitcoin traders have noticed an anomaly. Around 10 AM Eastern Time daily, coinciding with the U.S. stock market open, a flood of sell orders hits BTC and related ETF shares. The pattern is remarkably consistent: gains during Asian and European hours, selling pressure as soon as New York opens. (Refer to the article: "Is Jane Street Manipulating Bitcoin? The Viral Theory Explained")

The data is hard to ignore. Charts from December 2025 show that on certain trading days, BTC would drop from $89,700 to $87,700 in minutes, first liquidating $171 million in leveraged long positions, then quickly rebounding. This pattern appeared on December 1, 5, 8, 10, 12, 15, and repeated throughout January and February 2026.

Crypto Twitter gave it a name: the "10 AM Smash."

Fingers quickly pointed to Jane Street, and not without reason. Jane Street is one of the four Authorized Participants (APs) for BlackRock's IBIT. IBIT is the world's largest spot Bitcoin ETF. The other three are Virtu Americas, JP Morgan Securities, and Marex. As an AP, Jane Street has the special privilege to create and redeem ETF shares, meaning they have direct access to the core pipeline that "puts Bitcoin into an institutional wrapper and takes it out again."

Their 13F disclosures also confirm their massive scale. According to Q3 2025 filings, Jane Street held $5.7 billion worth of IBIT shares. In Q4 2025, they added another $276 million, bringing their total holdings to over 20 million shares, valued at approximately $790 million at year-end prices. Their peak exposure once approached $2.5 billion in IBIT.

But what's truly suspicious is this: While allegedly dumping BTC in the spot market every morning, they reportedly increased their holdings of MSTR (Strategy, formerly MicroStrategy) by 473% in Q4 2025, accumulating 951,187 shares worth approximately $121 million. During the same period, major institutions like BlackRock and Vanguard were significantly reducing their MSTR holdings by billions of dollars.

You can review this logic again: Open the market and smash BTC—drive the price down—liquidate leveraged longs—buy back at lower levels; simultaneously, with the expectation of a rebound in hand, increase holdings in the market's "most leveraged" Bitcoin proxy asset.

Glassnode co-founders Jan Happel and Yann Allemann reignited this speculation through their X account Negentropic, linking the algorithmic trading rhythm to the Terraform lawsuit documents. The Milk Road account further amplified the discussion, stating that the market has had "persistent whispers" pointing to certain institutional trading desks executing "a very specific, and somewhat shady, playbook."

Then, the lawsuit landed. Something very unusual happened.

After the Terraform lawsuit against Jane Street was filed, the "10 AM Smash"... didn't appear. For the first time in months, Bitcoin didn't plummet at the U.S. market open; instead, it rallied.

Today, Bitcoin rose over 3%, breaking through multiple resistance levels and returning above $68,000—just days ago, it was approaching a drop below $60,000. Over $323 million in short positions were liquidated. The Stochastic RSI hit 100. ETF net inflows for the day reached $257.7 million, the highest since early February.

The pattern was broken.

Of course, I must be cautious. Correlation does not equal causation. There could be many variables: Trump's State of the Union address, technical oversold conditions, short covering. The Fear & Greed Index fell to 11, in "Extreme Fear," often a signal for a reversal. The RSI also dropped to 15.80, a reading not seen since the pandemic crash of 2020—which was followed by a 1400% surge. But the timing is still hard to dismiss as a coincidence.

A narrative is circulating on X: After the lawsuit, Jane Street was "forced to shut down its trading algorithms." Jane Street told Cointelegraph that these are "baseless, opportunistic claims." Whether they were forced to stop or pressed pause themselves due to legal risk, the result is the same: that persistent selling pressure disappeared.

What does this really mean for Bitcoin?

Spot Bitcoin ETFs were originally seen as the "ultimate equalizer": an institutional on-ramp, a compliant product, backed by BlackRock. And they have been extremely successful—IBIT alone has absorbed over $20 billion since its launch.

But the ETF structure also brought back something Bitcoin was trying to escape: trusted intermediaries with privileged access points.

When the SEC approved spot Bitcoin ETFs in January 2024, it required a "cash-only" creation and redemption mechanism. Whenever shares need to be created or redeemed, someone must buy or sell real Bitcoin. The institutions with access to this process—the APs—naturally possess a layer of structural advantage over other market participants.

By September 2025, the SEC further approved IBIT to adopt "in-kind" creation and redemption, meaning APs can directly exchange Bitcoin for ETF shares without going through fiat currency. This gave Jane Street, Virtu, JP Morgan, and Marex more direct control over the flow of "Bitcoin in and out of the largest institutional wrapper."

The "10 AM Smash" is, in essence, a new symptom of an old disease—the one that has plagued the gold market for decades.

I wrote in "The Gold Endgame Begins": In the paper-for-paper trading game, whoever is closer to the privileged access point can move the price before the rest of the market reacts.

JPMorgan traders Gregg Smith and Michael Nowak were convicted of "spoofing" in the precious metals futures market. The scheme lasted 8 years and involved thousands of illegal trades. JPMorgan paid $920 million to settle. Deutsche Bank also paid $30 million for similar issues. UBS, HSBC, and six individual traders also faced CFTC anti-spoofing charges.

The same playbook. Just a different asset.

And every time, these institutions package it as "market making," "arbitrage," "hedging"—the euphemisms are endless. The result is always the same: ordinary people get torn apart, insiders harvest the spread.

So, what's next?

The larger structural picture hasn't changed. ETF net outflows of $4.5 billion in the first 8 weeks of 2026 look scary. But Strategy (Saylor's company) just bought $39 million worth of BTC, accounting for 99% of all public company Bitcoin purchases in the same period. The real big players aren't selling; they seem more like they're waiting for the algorithms to finish their work.

Perhaps—just perhaps—the algorithms have stopped.

If Jane Street, due to legal risks, cross-continental regulatory scrutiny, or self-preservation, is forced to step back from that "daily selling program" (as alleged), then a structural headwind that has been pressing down on Bitcoin for four months has been partially removed.

Bitcoin was born for moments like this: a monetary system that doesn't rely on trusted intermediaries; a system that doesn't need authorized participants; a system that shouldn't be front-run by "private channels of former interns."

But let's not forget how we got here. The very institutions labeled as "market makers" and "liquidity providers" are the same ones accused of front-running a collapse, manipulating a national-level index, and executing daily algorithmic sales of the very asset their ETF tracks.

This is the system Bitcoin was designed to replace.