The 10 a.m. Bitcoin Mystery: Why Daily Dumps Vanished After Jane Street Lawsuit

Bitcoin crashed from $125,000 to $62,000 while following an eerily predictable pattern: dump at exactly 10 a.m. ET, every single trading day. Then Jane Street got sued, and the pattern vanished overnight. Bitcoin surged 6% to nearly $70,000.

Coincidence? The crypto community thinks not.

The Accusation: A $2.5 Billion Conspiracy

For months, crypto sleuths on X have been documenting what they call the "10 a.m. slam." The theory goes like this: Jane Street, one of Wall Street's most powerful trading firms, was systematically selling bitcoin at market open to drive prices down, then scooping up BlackRock's IBIT shares at a discount.

The firm holds roughly $790 million in IBIT shares as of Q4 2025, making it one of the largest players in the bitcoin ETF game. "BTC has been consistently dumping ~2-3% within minutes of the U.S. cash open almost every trading day since early November," noted popular X account Whale Factor.

Then came the lawsuit. TerraForm Labs' bankruptcy operator sued Jane Street for insider trading that allegedly hastened Terra's $60 billion collapse in 2022. Within 48 hours, bitcoin's daily 10 a.m. nosedive simply... stopped.

The Data Detective Work

But crypto economist Alex Kruger pulled the actual numbers, and they tell a different story. Since January 1, IBIT's cumulative return in the 10:00-10:30 ET window has been +0.9%—hardly evidence of systematic dumping.

More tellingly, bitcoin's morning moves have closely mirrored the Nasdaq's performance during the same periods. "Noisy, not a systematic dump," Kruger concluded. "The performance pattern mirrors broader risk-asset repricing, not Jane Street foul play."

Still, Jane Street's track record raises eyebrows. India's SEBI banned the firm from local markets last year, freezing $566 million in alleged illegal gains from a "morning pump, afternoon dump" scheme.

The ETF Machine's Hidden Mechanics

Here's where it gets interesting: Jane Street isn't some rogue operator. It's an authorized participant (AP) in a regulated system designed to keep ETF prices tethered to their underlying assets.

When bitcoin rises overnight and ETF demand spikes at U.S. market open, APs like Jane Street can short ETF shares first—without borrowing costs, thanks to regulatory exemptions—then create new shares later by sourcing bitcoin privately through over-the-counter deals.

This "short first, buy later" approach is perfectly legal. But it creates what Yale ReiSoleil, CTO of Untrading, calls a "grey window where price discovery can be muted without anyone breaking rules."

"No single firm sits at a terminal pressing 'dump Bitcoin,'" ReiSoleil explains. "But the structure itself—the ETF architecture, the AP exemptions, the shift to in-kind creation—creates systematic pressure that looks like market-making but functions like market manipulation."

The Bigger Picture: When Traditional Finance Meets Crypto

The Jane Street saga reveals a deeper tension. Bitcoin ETFs were supposed to bring institutional legitimacy to crypto markets. Instead, they may have introduced traditional finance's opacity to what was once a transparent, 24/7 global market.

APs can hedge with futures instead of buying spot bitcoin immediately. They can source coins privately, off-exchange. The spot market never sees the buy pressure that should naturally occur when ETF demand spikes.

"Whether the spot is bought by the AP or the basis trader, the net demand on BTC spot is identical," Kruger argues, defending the current system. But critics say that misses the point: it's not about net demand, it's about when and how that demand hits the market.

Jane Street declined to comment for this story.