From the Terra collapse to the "10 o'clock blow," how does Jane Street manipulate markets across two continents?

This article is from: @peruvian_bull

Compiled by｜Odaily Planet Daily (@OdailyChina); Translator｜ Ethan (@ethanzhang_web3)

Editor’s Note: Over the past four months, Bitcoin has almost followed a fixed rhythm—each time the US stock market opens, a wave of selling pressure emerges. It rises during Asian hours, continues upward in Europe, but quickly falls back once New York opens. Traders call it the “10 o’clock crash.” This force feels like an invisible structural headwind, repeatedly liquidating leveraged positions, depressing market sentiment, and gradually wearing down investors’ patience.

However, when the lawsuit documents against Jane Street were officially released, this months-long pattern was suddenly broken. Was it just a coincidence, or a sign of deeper structural change? How did the whole process unfold? Odaily Planet Daily provides the full translation below.

You’ve never heard of the most powerful trading firm that just got caught red-handed—twice, on two different continents. And Bitcoin, it seems, finally took a breath of relief because of it.

Jane Street Group is a New York-based quantitative trading firm. They have no CEO.

According to their own words, they operate like a “anarchist commune.” In the first nine months of 2025, they achieved a net trading revenue of $24 billion, surpassing the entire 2024 total of $20.5 billion. In just the second quarter of 2025, they reached $10.1 billion, the highest single-quarter trading revenue in Wall Street history.

By any standard, they are the most profitable trading institution globally.

And just this week, Terraform Labs’ bankruptcy trustee filed a lawsuit in Manhattan federal court, accusing Jane Street of using insider information to front-run the May 2022 Terra Luna collapse. That collapse wiped out $40 billion in market value and triggered a chain reaction that ultimately brought down Celsius, Three Arrows Capital, and FTX.

The accusation is shockingly straightforward. On May 7, 2022, Terraform Labs quietly withdrew $150 million worth of UST from Curve3pool, a major decentralized liquidity pool. No public announcement was made—just a silent liquidity drain.

Ten minutes later, a wallet associated with Jane Street withdrew $85 million from the same pool. Just ten minutes…

The lawsuit states that Bryce Pratt, a former Terraform intern who became a full-time Jane Street employee in September 2021, established private communication channels with former colleagues and allegedly directly passed major undisclosed information about Terraform’s liquidity changes to the Jane Street trading team.

The complaint lists four defendants: Jane Street Group LLC, co-founder Robert Granieri, and employees Bryce Pratt and Michael Huang.

The trustee’s statement hits the core: Without the exclusive insider information held by Jane Street, such trades would be impossible.

Worse, the lawsuit claims that Jane Street’s withdrawal activity helped trigger the UST de-pegging, plunging the entire Terraform ecosystem into a death spiral. LUNA fell from over $80 to nearly zero. $40 billion evaporated. Ordinary investors lost everything—pensions, education funds, lifelong savings—disappearing within days.

Jane Street’s response? They called the allegations “desperate and baseless.”

But this isn’t the first time.

In July 2025, India’s Securities and Exchange Board (SEBI) filed one of the largest market manipulation cases in the country’s history against Jane Street. The investigation found that during 18 derivatives expiry dates from January 2023 to March 2025, Jane Street executed textbook-like pump-and-dump operations on the Bank Nifty index.

Their tactics were extremely mechanical:

Morning: Jane Street’s algorithms heavily bought constituent stocks and futures, pushing the index up by 1% to 1.3%. On some trading days, SEBI determined that all positive index gains came from Jane Street.

Meanwhile, they built large short options positions, mainly selling call options and buying put options, with ratios far exceeding their stock holdings. SEBI concluded that, based on delta equivalence, the options positions were 7.3 times larger than the spot and futures holdings. This was neither hedging nor arbitrage, but a packaged directional manipulation.

Afternoon: They reversed the morning’s trades, selling the stocks they bought earlier. As the index declined, short options profited. This cycle repeated at each expiry.

SEBI estimated illegal profits of 484.3 billion rupees (~$5.8 billion) and described the scheme as “deliberate market price manipulation.” The regulator also pointed out that even after the exchange issued a clear warning in February 2025, Jane Street continued executing the strategy.

SEBI’s language was notably severe: “Market integrity and the trust of millions of small investors and traders must no longer be hijacked by such untrustworthy actors.”

Jane Street was barred from entering the Indian securities market, deposited over $560 million into a escrow account, and filed an appeal. The case is still under review at the Indian Securities Appellate Tribunal.

Now, back to Bitcoin.

Since November 2025, Bitcoin traders have observed an unusual phenomenon. Every day around 10 a.m. Eastern Time, just as the US stock market opens, a large wave of sell orders floods BTC and related ETFs. The pattern is remarkably consistent: rises during Asian and European hours, then faces selling pressure at the New York open. (See article: “Is Jane Street Manipulating Bitcoin? Virus Theory Analysis”)

These data points cannot be ignored. Charts from December 2025 show that on certain trading days, BTC can drop from $89,700 to $87,700 within minutes, blowing up $171 million in leveraged longs before quickly bouncing back. This pattern appeared on December 1, 5, 8, 10, 12, 15, and repeatedly in January and February 2026.

The crypto Twitter community dubbed it the “10 o’clock crash.”

The target quickly pointed to Jane Street, and not without reason. Jane Street is one of four authorized participants (APs) for IBIT, the world’s largest spot Bitcoin ETF. The other three are Virtu Americas, JP Morgan Securities, and Marex. As an AP, Jane Street has the special authority to create and redeem ETF shares, giving them direct access to the core pipeline of “wrapping Bitcoin in an institutional shell and unwrapping it.”

Their 13F filings also confirm their massive scale. According to Q3 2025 filings, Jane Street held $5.7 billion worth of IBIT shares. In Q4, they added another $276 million, bringing their total holdings to over 20 million shares, worth approximately $790 million at year-end prices. At peak, their exposure approached $2.5 billion in IBIT.

But what’s truly suspicious is that, while they allegedly dumped BTC on the spot market every morning, they increased their holdings of MicroStrategy (MSTR) by 473% in Q4 2025, accumulating 951,187 shares worth about $121 million. Meanwhile, major institutions like BlackRock and Vanguard were significantly reducing their MSTR positions by billions.

Revisit this logic: smashing BTC at open—driving the price down—blowing up leveraged longs—buying back at lows; meanwhile, riding the expected rebound, they further increased their “most leveraged” Bitcoin proxy assets.

Jan Happel and Yann Allemann, co-founders of Glassnode, reignited this speculation via their X account Negentropic, linking algorithmic trading rhythms to the Terraform lawsuit documents. Milk Road further amplified the discussion, suggesting there’s “constant whispering” pointing to certain institutional trading desks executing “a very specific, shadowy script.”

Subsequently, the lawsuit was filed. An extraordinary event occurred.

After Terraform filed against Jane Street, the “10 o’clock crash”… did not happen. For the first time in months, Bitcoin did not dump at US market open; instead, it rose.

Today, Bitcoin surged over 3%, breaking multiple resistance levels, and re-entered the $68,000 zone—just days ago, it nearly fell below $60,000. Over $331 million in short positions were liquidated. The stochastic RSI hit 100. The ETF’s daily net inflow reached $257.7 million—the highest since early February.

This pattern has been broken.

Of course, I must be cautious. Correlation does not imply causation. Many variables could be at play: Trump’s State of the Union, technical oversold conditions, short covering. The Fear & Greed Index dropped to 11, indicating “extreme fear,” often a contrarian signal. RSI also fell to 15.80—the lowest since the COVID crash of 2020, which then saw a 1,400% rally. But at this moment, it’s still hard to dismiss as mere coincidence.

A popular theory on X is that after the lawsuit, Jane Street was “forced to shut down their trading algorithms.” Jane Street told Cointelegraph these are “baseless, sensational claims.” Whether they were forced to stop or paused voluntarily due to legal risks, the result is the same: the persistent selling pressure vanished.

What does this really mean for Bitcoin?

Spot Bitcoin ETFs were once seen as the “ultimate equalizer”: institutional access, compliant products, backed by BlackRock. They have indeed been highly successful—since launch, IBIT alone has absorbed over $20 billion.

But the ETF structure also brought back something Bitcoin originally sought to escape: a privileged intermediary with trusted access.

When the SEC approved spot Bitcoin ETFs in January 2024, they mandated a “cash-only” creation and redemption process. Every time shares are created or redeemed, someone must buy or sell real Bitcoin. The institutions involved—APs—have a structural advantage over other market participants.

By September 2025, the SEC approved IBIT to use “in-kind” creation and redemption, allowing APs to exchange Bitcoin directly for ETF shares without involving fiat. This gave Jane Street, Virtu, JP Morgan, and Marex even more direct control over the flow of Bitcoin in and out of the “largest institutional shell.”

The “10 o’clock crash” is essentially a symptom of an old disease—the same ailment that has plagued gold markets for decades.

I wrote in “The Gold Endgame Begins”: in a paper-to-paper trading game, whoever has closer access to the privileged interface can push prices ahead of others’ reactions.

JPMorgan traders Gregg Smith and Michael Nowak were convicted of “spoofing” in the precious metals futures market. The scheme lasted eight years, involving thousands of illegal trades. JPM paid $920 million in settlement. Deutsche Bank paid $30 million for similar issues. UBS, HSBC, and six individual traders faced CFTC spoofing charges.

The same script. Just a different asset.

And each time, these institutions package it as “market making,” “arbitrage,” or “hedging”—polite terms that hide the reality. The result is always the same: ordinary traders get torn apart, insiders harvest the spreads.

So, what’s next?

The larger structural picture remains unchanged. In the first eight weeks of 2026, ETF net outflows totaled $4.5 billion—seemingly alarming. But Strategy (Saylor’s company) just bought $39 million worth of BTC, accounting for 99% of all new institutional buying during that period. The big players aren’t selling; they’re waiting for the algorithm to finish its work.

Perhaps—just perhaps—the algorithms have already pulled back.

If Jane Street, due to legal risks, cross-border regulatory scrutiny, or self-preservation, is forced to retreat from their “daily sell plan” (as alleged), then a key part of the structural headwind pressing on Bitcoin for four months could be removed.

Bitcoin was made for moments like this: a currency system that doesn’t rely on trusted intermediaries; a system that doesn’t need authorized participants; a system that shouldn’t be overtaken by “private channels of former interns.”

But let’s not forget how we got here. The very institutions called “market makers” and “liquidity providers” are also the ones accused of front-running crashes, manipulating national indices, and executing daily algorithmic sell-offs of their ETF’s underlying assets.

This is the system Bitcoin was designed to replace.