Did Market Manipulation Cause Bitcoin to Crash?

Bitcoin (CRYPTO: BTC) has shed more than 45% of its value during the past six months, and that pain is real enough to send crypto investors hunting for a villain. And they've found one, or at least some people think they have: It's Jane Street, a quantitative Wall Street trading company, which is being accused across social media of systematically driving Bitcoin's price lower. The allegations went viral in late February after a federal lawsuit accused the firm of insider trading tied to a major crypto company collapsing in 2022.

Let's untangle what's actually happening and why it probably shouldn't change your investment approach.

Image source: Getty Images.

The case against the scapegoat

The core allegation proposed on social media is that Jane Street, acting as a holder and trader of the iShares Bitcoin Trust (NASDAQ: IBIT) and other spot Bitcoin exchange-traded funds (ETFs), has been intentionally dumping its holdings at the U.S. market open around 10 a.m. each day, thereby depressing Bitcoin prices and triggering forced liquidations of leveraged crypto traders.

Proponents of the narrative typically suggest that the purpose of this action is to then buy the coin at a lower price level than what would otherwise be possible, setting the company up for a profit the next day when the process supposedly repeats. Similarly, Jane Street is hypothesized to have had some kind of role in the Oct. 10 crypto flash crash, which is still a sore subject among many crypto investors.

You can probably already tell that there are a few holes in this story, but some circumstantial details still make the theory tempting to endorse.

Jane Street disclosed having about $790 million in Bitcoin Trust shares in its Q4 2025 filing, adding roughly $276 million during the quarter, so it likely has just enough financial heft to slightly affect Bitcoin's price from time to time. It's also true that Jane Street was sued on Feb. 23 in federal court in Manhattan for alleged insider trading before and during the dramatic collapse of the TerraUSD stablecoin in 2022. And India's securities regulator banned it from local markets in 2025 over alleged index manipulation.

But investment firms like Jane Street make their revenue by trading, which includes selling certain assets whenever they see fit, and that isn't the same as intentional market manipulation. Furthermore, long-term Bitcoin holders sold an estimated 143,000 Bitcoins during the 30-day period ended March 1, pushing the price down, and at the same time, ETF redemptions frequently exerted far more selling pressure than any single company could.

In short, the theory probably isn't something to pay much attention to. The Jane Street narrative is mostly a distraction, and until proven otherwise, it's probably not guilty of what it's being accused of.

You usually don't need to care who's selling or why

So what should investors do with this information? First, take it as a lesson about the importance of not getting shaken out of your investments.

Even granting the worst-case version of the allegation, there's no way for a market manipulator to alter Bitcoin's protocol or damage its core investment thesis. The supply cap of 21 million coins persists, and about 95% of its possible supply has been mined and is in circulation. The next halving in 2028 will make it even scarcer than before, as less Bitcoin will be mined per block, with even less issued with each successive halving roughly every four years. These mechanics are immutable regardless of what any trading business does with its ETF shares, and over the long run, they're major drivers for the asset's price rising because they make it much easier for a broad swath of investors to buy and hold the shares in their investment portfolios.

The current decline, frustrating as it may be, is also fairly common in Bitcoin's history. Past bear markets for the coin brought 70% to 85% declines relative to the all-time highs before recoveries started.

So being patient and buying the dip are better strategies than panic selling or pinning blame on a single trading firm that probably lacks the heft to spin the Bitcoin market. There's simply nothing going on here that would lead someone with a long-term perspective to dump their Bitcoin.

Alex Carchidi has positions in Bitcoin and iShares Bitcoin Trust. The Motley Fool has positions in and recommends Bitcoin and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.