Bitwise CIO Matt Hougan Rejects Jane Street Blame for Bitcoin Dip

Matt Hougan has dismissed claims that Jane Street orchestrated Bitcoin’s recent decline, calling the decline “the classic crypto winter.”

Matt Hougan, chief investment officer at Bitwise, dismissed claims that trading firm Jane Street is behind Bitcoin’s recent slide, writing in X on February 26 that the decline is “classic crypto winter,” not a concerted attack.

His comments come as the lawsuits and viral threads rekindle old fears about market manipulation even as Bitcoin trades more than 46% below its all-time high.

Conspiracy Claims Conflict With ETF Mechanics

Speculation has intensified after reports emerged that the bankruptcy director of Terraform Labs has filed a lawsuit against Jane Street in Manhattan federal court, accusing the company of using insider information before the May 2022 collapse of Terra-Luna.

According to the complaint, Jane Street withdrew 85 million TerraUSD from Curve’s 3pool minutes after Terraform issued 150 million UST, a sequence of claims that precipitated the $40 billion collapse. Jane Street dismissed the allegations, calling the lawsuit a “massive attempt” to recover lost money and blaming Terraform’s management for the failure.

At the same time, some crypto analysts, including Bull Theory, suspect that Jane Street uses the “10 AM” selling algorithm to push Bitcoin down and benefit from the exit.

Bull Theory also pointed to an interim order from India’s Securities and Exchange Board that accuses Jane Street businesses of manipulating the expiration date index between January 2023 and March 2025, accusing billions of illegal profits. The case is ongoing, and the company has appealed.

However, Hougan dismissed this narrative as inappropriate. “Conspiracy theories are wild,” he wrote, arguing that Bitcoin is down because investors are opening long positions, reducing leverage, and moving money elsewhere.

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Bitwise CIO also amplified colleague André Dragosch’s analysis of Bitcoin’s daily performance since the ETF’s launch in January 2024. Dragosch’s data contradicted the 10 AM viral slam narrative by showing pronounced weakness at midnight ET, pointing to non-US trading hours as the real time of vulnerability.

Macro strategist Alex Krüger also echoed Hougan’s skepticism, calling Jane Street’s theory “yet another viral and flawed conspiracy theory.” He noted that primary dealers and authorized participants (APs) simply bridge the gap between ETFs, futures, and the underlying market.

“There are too many doomsday stories and conspiracy theories circulating right now,” Krüger wrote. “Historically, that’s the kind of sentiment you see.”

Structural Questions Remain Beyond Litigation

This controversy has also reignited the debate about ETF pipelines. ProCap CIO Jeff Park wrote on February 25 that the concern is less about a single firm and more about how APs operate under statutory exemptions that allow for asset creation and redemption.

In theory, APs can hedge ETF exposure to futures instead of buying Bitcoin directly, which critics argue could dampen the demand for derivatives.

There are no lawsuits or regulatory filings to date that establish coordinated misconduct in the Bitcoin markets. However, the overlap between large firms, derivatives strategies, and ETF machines fueled suspicions during the downturn.

For Hougan, the explanation is simple. Bitcoin’s four-year cycle, rate resets, and changing investor priorities are enough to explain the reversal.

“This is the winter of classic crypto and there will be a spring of classic crypto,” he wrote. “People want someone to blame – I get it – but the truth is a lot more boring than that.”