Jane Street, ETFs, and Bitcoin: Allegations, Market Structure, and the 10AM Debate

The 10am Drop: How Jane Street Broke Bitcoin's Price

Bitcoin should be at least $150,000 right now and everyone knows it.
Yesterday, a federal lawsuit was filed in Manhattan that explains exactly why it isn't.

Let's connect three threads for the first time: a federal insider trading case built on a private chat group called "Bryce's Secret," a pattern of systematic 10am sell programs that suppressed Bitcoin's price through late 2025, and an undisclosed derivative book that may make the largest Bitcoin ETF position in history a tool for suppressing the price of Bitcoin.

All three threads lead back to one name: Jane Street Capital.

The Intern

It starts with an intern named Bryce Pratt.

Pratt worked as an intern at Terraform Labs, the Singapore-based company behind the algorithmic stablecoin TerraUSD and its token Luna. He left Terraform and joined Jane Street as a full-time employee in September 2021. 

Jane Street is also where SBF learned to trade before founding FTX and Alameda Research, and many of his future colleagues came from the firm or intersected with its networks.

According to the lawsuit filed by Terraform's bankruptcy administrator Todd Snyder, Pratt became the bridge between his former employer and his new one through a chat group that court filings describe as "Bryce's Secret." 

The lawsuit alleges that Jane Street used this channel to obtain material nonpublic information about Terraform's internal liquidity moves.

The critical moment came on May 7, 2022. Terraform withdrew $150 million in TerraUSD from Curve3pool, a decentralized trading platform that served as the primary liquidity hub for the stablecoin. Within ten minutes of that withdrawal, before Terraform informed the public or made any announcement, a wallet linked to Jane Street pulled $85 million in TerraUSD from the same pool.

https://x.com/BullTheoryio/status/2026233215133093891

The combined selling pressure helped trigger UST's break from its dollar peg. Within days, Luna's algorithmic mint-and-burn mechanism spiraled out of control, hyperinflating the token supply and destroying $40 billion in market value. Retail investors suffered catastrophic losses. 

Jane Street, according to the lawsuit, avoided more than $200 million in potential exposure by unwinding its position at precisely the right moment, "mere hours before the Terraform ecosystem collapsed."
The lawsuit describes trades that "would have been impossible without inside information to which [Jane Street] had unique access." 

Jane Street calls the suit "desperate" and "baseless," arguing that the losses suffered by Terra and Luna holders were caused by Terraform's own fraud. 

Do Kwon is now serving a 15-year prison sentence. Snyder has also filed a separate $4 billion lawsuit against Jump Trading over alleged manipulation of the same collapse, which suggests a systematic investigation into institutional conduct during the Terra death spiral rather than just an isolated claim against a single firm.

https://x.com/zerohedge/status/2026155452795371778

The Clock

Beginning in late 2024 and accelerating through 2025, Bitcoin's price began doing something that traders noticed but couldn't explain. 

Every trading day at 10am Eastern, coinciding with the U.S. stock market open, Bitcoin experienced sudden and sharp sell-offs. The drops were precise, algorithmic, and wildly disproportionate to broader market conditions. They wiped out leveraged long positions, triggered cascading liquidations, and then reversed within hours.

Jan Happel and Yann Allemann, the co-founders of blockchain analytics firm Glassnode, documented these patterns through their shared account Negentropic. They tracked the algorithmic precision of the drops across months of trading data, and the pattern was not subtle. Charts from December  show Bitcoin falling from $89,700 to $87,700 within minutes of the 10am open, erasing $171 million in long positions before recovering. 

This happened every day, day after day.

https://x.com/WhaleFactor/status/1998407705296347333

Jane Street, as a designated market maker and authorized participant for multiple Bitcoin ETFs, had both the inventory and the infrastructure to execute coordinated selling at scale during predictable liquidity windows. Selling into thin order books at the open would depress the price, trigger liquidation cascades among leveraged traders, and create buying opportunities at lower levels. The firm could then re-enter at the bottom of a move it had manufactured.

Then something revealing happened. 

According to Glassnode's co-founders, the daily flash crashes ceased after the Terraform Labs lawsuit filings became public early last year. Bitcoin's price stabilized significantly in subsequent trading sessions. The behavioral change is consistent with a firm that suddenly had legal discovery and depositions to consider.

https://x.com/BSCNews/status/2026524169429725433

The 10am pattern resumed in Q3 2025. By December, it was back with full force. 

Basically, the 10am dumps stopped the moment Jane Street had lawyers looking over its shoulder, and started again when the heat died down.

The Machine

In its Q4 2025 13F filing, Jane Street disclosed holding 20,315,780 shares of IBIT worth approximately $790 million. The firm added 7,105,206 shares during the quarter alone, a $276 million increase. At one point last year, its total IBIT position was valued at nearly $2.5 billion. 

Simultaneously, the firm boosted its holdings of MicroStrategy stock by 473%, accumulating 951,187 shares worth roughly $121 million, even as BlackRock and Vanguard divested billions in MSTR during the same period.

https://x.com/BTCtreasuries/status/2025857339430191455

This looks like bullish accumulation if you don't understand what Jane Street actually is.

Jane Street is one of only four firms authorized to conduct in-kind creations and redemptions for IBIT. The others are Virtu Americas, JP Morgan Securities, and Marex. Jane Street is also an authorized participant for Fidelity's and WisdomTree's Bitcoin ETFs. This role gives the firm direct access to the mechanism that connects ETF share prices to actual Bitcoin. Jane Street can move real Bitcoin into and out of the ETF structure, arbitrage price differences between the fund and the spot market, and maintain inventory positions that dwarf what any normal market participant could accumulate.

Basically, Jane Street has direct access to the pipe that connects the Bitcoin ETF to actual Bitcoin, and almost nobody else does.

The crypto press reported the 13F as a sign of institutional conviction. The people who actually understand market structure immediately said otherwise.

The Invisible Book

Former hedge fund manager Michael Green called the bullish interpretation of Jane Street's 13F "painful." He pointed out that Jane Street's IBIT position "is almost entirely offset by undisclosed options and futures positions" and that "they are certainly not 'accumulating' a position in Bitcoin. That's how market making works."

Former prop trader Ryan Scott was blunter: "Anyone posting this as bullish is committing a capital offense. This should be 'You'll never guess who also has offsetting derivative positioning that does not need to be reported.'"

Nik Bhatia reduced it to incentives: "Jane Street owns IBIT so that it can write options, arbitrage, and everything else a quantitative trading shop does to make fast money."

Here is what this means for every person who holds Bitcoin or IBIT.

A 13F filing discloses long equity positions. It doesn't require disclosure of options, futures, or swaps. When Jane Street reports holding $790 million in IBIT shares, the filing tells you nothing about whether those shares are hedged by puts, offset by short futures, or wrapped in a collar that makes the firm's net Bitcoin exposure zero or even negative.

The public just sees accumulation. The actual position could be a massive short that looks like a long because the offsetting half of the trade is invisible under current disclosure rules. 

The 13F is a photograph of one side of the balance sheet. Nobody outside the firm can see the other side.

This is where the question every Bitcoin holder should be asking becomes unavoidable. If the firm holds $790 million in IBIT shares and offsets that position with $790 million in put options or short futures, the net exposure is zero. If the derivative book exceeds the equity position, the net exposure is negative, meaning Jane Street profits when Bitcoin's price falls. 

In either scenario, the firm has every incentive to use its privileged position as authorized participant to suppress the spot price, trigger liquidations, and harvest the spread.

What is Jane Street's actual net exposure to Bitcoin? The current disclosure framework does not require them to answer.

The Precedent

Jane Street's conduct in Bitcoin markets has not been tested by regulators. Its conduct in other markets has. 

In 2025, the Securities and Exchange Board of India published a 105-page enforcement order against Jane Street entities for manipulating BANKNIFTY index options. 

https://x.com/vishalmehta29/status/1940970469320282334

SEBI found that the firm used coordinated trading across cash and derivatives markets to generate ₹36,502 crore (approximately $4.3 billion) in profits over a two-year period, with ₹735 crore extracted in a single trading day. 

The regulator described the activity as clearly illegal in any country with a functioning financial regulator and issued interim restrictions on the firm's trading. Jane Street's strategies in Indian index derivatives followed a familiar structure: exploit privileged speed and scale to move one market, then harvest profits in the derivative layer sitting on top of it.

The question is whether the same logic applies to Bitcoin.

21 Million

The hard cap of 21M is enforced by the network of sovereign Bitcoin nodes.

The cap assumes that price discovery is honest, that the market reflects actual supply and demand, and that when institutions hold Bitcoin or Bitcoin-adjacent instruments, their positions represent genuine exposure to the asset rather than raw material for derivative strategies invisible to every other participant.

In other words, the 21M cap only works if the market sitting on top of it is honest.

Jane Street is one of four firms with the keys to Bitcoin's ETF infrastructure. It faces a federal lawsuit alleging insider-driven front-running that helped destroy $40 billion in value. It has been accused of running algorithmic sell programs that suppressed Bitcoin's price for months. And it holds the largest disclosed ETF position in Bitcoin while maintaining a derivative book that could make its actual exposure the opposite of what filings suggest.

So then, the cap is irrelevant when Jane Street can fabricate unlimited synthetic supply through undisclosed derivatives stacked on top of its own ETF inventory. 

Bitcoin's scarcity is real at the protocol level but the price discovery mechanism sitting above it has been compromised by a firm that treats privileged access as a profit engine, and the current disclosure framework lets them do it without anyone watching.

Every Bitcoin holder deserves to know: what is Jane Street's actual net position?

Until we know, Jane Street decides the price of Bitcoin.

https://x.com/1914ad/status/2026709297447485625