Bitcoin's 10 AM Plunge: Jane Street Manipulating the Market? Data Points in Another Direction

Original Author: CryptoSlate / Oluwapelumi Adejumo

Original Compilation: Shenchao TechFlow

Introduction: As Bitcoin recently rebounded to $70,000, a conspiracy theory linking Jane Street to "U.S. stock market opening sell-offs" has gone viral in the crypto community. This article deconstructs this claim from three dimensions: on-chain data, ETF structure, and options positioning. The conclusion is: the real issue is not Jane Street, but the black box of price discovery in the ETF era—the opacity of institutional hedging is making it increasingly difficult for retail investors to read the market.

Full text is as follows:

As Bitcoin rebounded to approach $70,000 in the past 24 hours, a familiar debate has reignited in the crypto market: Do Wall Street institutions operating within the spot ETF ecosystem now wield excessive influence over price discovery?

This time, the target is Jane Street—a quantitative trading firm that is both a key ETF intermediary and a defendant in a new lawsuit related to the 2022 collapse of Terraform Labs.

On social media, traders have linked Bitcoin's recent rebound to a claim: that an intraday sharp decline pattern observed around the U.S. stock market open suddenly disappeared after the lawsuit became public.

This theory spread rapidly because it combines two long-resonant sentiments: distrust of large trading firms and unease about Bitcoin markets increasingly operating through traditional financial channels.

However, evidence supporting a "coordinated Bitcoin suppression" plan remains thin.

What this episode more clearly reveals is: the structure of spot Bitcoin ETFs has made it increasingly difficult for many investors to distinguish between genuine spot demand and activities like market-making, hedging, and arbitrage.

In this sense, the Jane Street controversy transcends allegations against a single institution. At its core is how Bitcoin's new institutional infrastructure shapes price discovery, and whether the market is becoming more efficient or more opaque.

Origins of the Jane Street Bitcoin Rumor

The rumor took shape after Bitcoin posted significant gains for two consecutive trading days. Users on X began asserting that the so-called "10 AM sell program" had vanished.

Notably, the X account Negentropic, run by Glassnode co-founders Jan Happel and Yann Allemann, was a key driver in spreading this theory. They claimed: "Jane Street lawsuit goes public, Bitcoin 10 AM slam miraculously disappears."

This claim quickly gained traction because Jane Street is no unknown entity. It is one of the world's largest trading firms and a known participant in the Bitcoin ETF market, serving as an Authorized Participant for IBIT (BlackRock's spot Bitcoin ETF).

In practice, this embeds it tightly into the core mechanism that maintains the alignment of ETF share prices with the value of the underlying holdings.

Simultaneously, legal disputes involving the company further fueled the controversy.

The liquidators of Terraform Labs filed a lawsuit in Manhattan, alleging that Jane Street and others profited in May 2022 during the collapse of TerraUSD by using material non-public information related to Terraform's liquidity operations.

The complaint alleges that Terraform withdrew $150 million in TerraUSD liquidity from Curve's 3pool, and wallets linked to Jane Street withdrew approximately $85 million minutes before this information became public.

Jane Street denies any wrongdoing, calling the case a desperate attempt to shift blame for losses caused by Terraform's own actions.

This lawsuit does not prove anything about current Bitcoin trading.

But it explains why traders were quick to link Jane Street to an observable market pattern. In the crypto world, trust is often fragile, and an institution accused in one market event often becomes a suspect for the next.

Industry Insiders Refute the Rumor

Against this backdrop, some Bitcoin traders believed that this top cryptocurrency had been subject to mechanical selling around the U.S. stock market open for months, liquidating long positions and creating liquidity vacuums in thin order books.

If such selling disappeared after Jane Street faced new legal pressure, perhaps the firm had been applying pressure to the market.

Furthermore, the company's early association with FTX founder Sam Bankman-Fried cast a shadow over its image. Bankman-Fried worked at the trading firm before founding FTX.

This narrative is emotionally compelling but far easier to assert than to prove.

Checkonchain on-chain analyst James Check directly refuted this argument, writing that Jane Street is not suppressing Bitcoin, and long-term holders selling spot to the market better explains price movements.

CryptoQuant Head of Research Julio Moreno holds a similar view, arguing that the theory overlooks a more obvious driver: a sharp contraction in Bitcoin spot demand since early October 2025.

He added that the operational mechanism blamed on Jane Street resembles the delta-neutral position management commonly employed by many trading firms.

The value of these rebuttals lies in pointing directly to the rumor's core weakness: Bitcoin was already under pressure from broader macro repricing pressures before entering 2026.

SoSo Value data shows institutional investors have reduced Bitcoin ETF exposure for five consecutive weeks, with total outflows from spot Bitcoin ETFs reaching approximately $4.5 billion.

Meanwhile, Glassnode data shows that recurring market pressure earlier this month triggered a structural shift in the Bitcoin options market towards a more unstable configuration.

The firm noted that the all-history gamma exposure (GEX) heatmap shows negative gamma expanding at and below current price levels, while the positive gamma "resistance wall" above spot prices is receding.

In plain language: option positions that typically act as shock absorbers are fading, and the market is increasingly in a zone where hedging flows no longer cushion declines but instead amplify them.

This dynamic is important: when prices are in a short-gamma regime, market makers' delta hedging tends to follow the trend, rather than selling on declines and buying on rallies.

The result: the market can move faster and further on relatively small catalysts—greater intraday volatility and a higher risk of cascading moves through key levels—until Bitcoin hits the next thick "gamma wall," at which point hedging switches back to a buffering mode.

In other words, traders are already in an environment prone to seeing "intent" everywhere. When liquidity is thin and leverage is high, almost any sharp move can appear organized.

The ETF Pipeline is Harder to Read Than It Appears

The deeper issue raised by the Jane Street controversy is structural, not about any single institution.

As argued by Jeff Park, Chief Investment Officer at ProCap Financial, the real question is not whether a single company is "exclusively suppressing" Bitcoin, but whether the ETF market structure grants Authorized Participants discretionary space that is opaque to the public.

This matters because investors often habitually interpret ETF disclosure data as clean directional signals—but that's not the case. Form 13F can show a large long ETF position, but SEC guidance explicitly states that short positions are not included, and short options are not netted against long positions.

In practice, the market may see the inventory but not the futures, options, or other hedging instruments wrapped around it.

This opacity is further compounded by how trust is structured. BlackRock's documentation for IBIT shows the trust can process share creation and redemption through Authorized Participants and can also trade with designated Bitcoin counterparties.

As of that filing, these counterparties included JSCT, LLC, an affiliate of Jane Street Capital, and Virtu Financial Singapore, an affiliate of Virtu Americas.

The document also shows the list of Authorized Participants has expanded to include JPMorgan, Citadel Securities, Citigroup, Goldman Sachs, UBS, Macquarie, and others, with a growing number of firms gaining access to the ETF creation/redemption mechanism.

Park's point is that this structure distorts outsiders' interpretation of ETF fund flows.

Under the old cash model, creating ETF shares required the fund to buy spot Bitcoin. But after the SEC approved in-kind creation and redemption for crypto ETPs in July 2025, Authorized Participants gained greater flexibility in sourcing and delivering the underlying asset.

The SEC stated this change would lower product costs and improve efficiency. But it also means Authorized Participants' exposures can be managed through a wider array of instruments and counterparties, making it harder to discern when ETF activity reflects genuine spot demand versus inventory management, basis trading, or hedge construction.

This is not evidence of abuse, and Park's argument does not rely on proving Jane Street or any other firm engaged in abuse. His sharper point is: Bitcoin's ETF era has inserted a black box between public holdings data and the underlying price discovery process.

The start of a trade looks like ordinary market-making, and so does the end. What's difficult to observe is the middle: whether hedging is done via spot, futures, swaps, or some combination of the three, and whether natural arbitrage mechanisms truly transmit genuine spot demand to Bitcoin.

This is precisely why the Jane Street rumor resonates. It is less an accusation against a single participant and more a signal—revealing how little the market understands about the pipelines through which it operates.

Why the U.S. Stock Market Open Feels Like a Selling Zone

The "10 AM theory" sounds plausible because, even without deliberate manipulation, the U.S. stock market open is a genuine volatility window.

This period concentrates cross-asset rebalancing, equity-related risk adjustments, and derivatives hedging operations.

In a market where ETF intermediaries can hedge inventory with futures or other instruments, futures can pull spot prices, not just follow them.

When order books are thin, these moves can appear larger and more conspiratorial than they are. Bloomberg reported earlier this month that Bitcoin market depth remains over 35% lower than October levels, highlighting how fragile liquidity has become.

Meanwhile, macro analyst Alex Kruger states that available data does not support the "systematic 10 AM daily selling" claim.

He writes that since January 1, IBIT's cumulative return in the 10:00-10:30 ET window is +0.9%, while the 10:00-10:15 window shows a -1% decline.

In his view, this is noise, not evidence of a repeatable suppression program.

More importantly, he says, the performance patterns of these two windows closely align with the Nasdaq, indicating a broad risk asset repricing, not a Bitcoin-specific operation.

This interpretation fits the broader market context better than the viral story.

If Bitcoin is increasingly traded as a macro risk asset via ETF wrappers, then pressure at the U.S. stock open—especially in a thin market—repeatedly creating Bitcoin weakness in the same intraday window should not be surprising.

On-Chain Scarcity is Clear, Price Discovery is Not

Bitcoin's supply is fixed by protocol. No change in ETF market structure can alter that. What has changed is the channel through which an increasingly large proportion of demand—and skepticism—now flows.

The Jane Street controversy reveals the fissure between these two realities. On-chain scarcity is transparent; the institutional system layered on top is not.

Investors can see ETF shares outstanding and partially disclosed holdings, but they cannot see every potential hedge behind a market maker's book, every internal net exposure, or every cross-market position.

This gap creates room for misunderstanding and distrust.

The fact that Jane Street has faced scrutiny in other markets does not help. In July 2025, Indian securities regulators issued an interim order in an index manipulation case involving a Jane Street entity, with Reuters later reporting that SEBI barred the firm from Indian securities markets while reviewing the case. Jane Street also denied wrongdoing there.

The India case is unrelated to Bitcoin, but it explains why crypto traders were primed to imagine the worst when Jane Street's name appeared in headlines again.

However, the available facts do not prove Jane Street executed a deliberate Bitcoin suppression plan.

They prove something else: the post-ETF Bitcoin market has become easier to access, more deeply integrated with institutions, and harder for the average investor to read.