How Jane Street’s Wall Street Power Shapes Bitcoin’s Market

Few know the name Jane Street, yet this Wall Street titan may hold more sway over Bitcoin’s price than anyone else. Behind a curious daily 2-3% Bitcoin drop at 10 a.m. Eastern lurks a complex web of authorized trading power, insider allegations, and questionable global exploits.

The Silent Giant Behind Wall Street and Bitcoin

Jane Street, a name largely unknown outside elite trading circles, might be the most powerful trading firm you’ve never heard of. Founded in 1999 and based in Manhattan, this quantitative trading powerhouse employs around 3,000 people—who on average make $1.4 million annually—and operates without a traditional CEO, instead governed by a management committee of 30 to 40 members.

Despite flying under the public radar, Jane Street’s footprint is massive. Last year, it generated more trading revenue than Bank of America, Citigroup, and even Goldman Sachs. To put that in perspective: it’s estimated Jane Street is responsible for over 10% of all U.S. stock trades.

This market dominance spills over into the crypto world via its role as one of only four authorized participants (APs) in BlackRock’s Bitcoin IBIT ETF—the largest Bitcoin ETF globally. These APs uniquely control the creation and redemption of ETF shares, a power that gives Jane Street privileged market influence.

ETF Authority: A Market Superpower Hidden in Plain Sight

When investors buy Bitcoin through ETFs like IBIT, they aren’t purchasing actual Bitcoin—they’re buying shares representing those Bitcoins stored in a fund. APs monitor and maintain the ETF’s price alignment with actual Bitcoin market prices.

But the privilege APs command goes beyond that. While typical investors must comply with regulations like Reg SHO that restrict short selling, APs can bypass some of these rules, allowing them to create and sell shares more flexibly. This exemption is a formidable strategic advantage, giving Jane Street the capacity to move markets in ways invisible to the public eye.

Additionally, Jane Street’s disclosures only reveal their long positions—the shares they own—not if those positions are offset by shorts, options, or derivatives. The opaque nature of these holdings means Jane Street could be betting on Bitcoin falling even while publicly appearing heavily invested.

A Puzzling Pattern: Bitcoin’s Daily 10 a.m. Slump

Starting November 2023, market observers began noticing an uncanny and persistent pattern: every trading day, Bitcoin would drop 2-3% right at 10:00 a.m. Eastern, coinciding with the U.S. stock market opening. This sudden dip triggers liquidations—forced sales by investors who borrowed funds to buy Bitcoin—sparking a downward spiral as falling prices push more traders to sell.

What first seemed like routine market fluctuations formed a nearly predictable cycle that caught the crypto community’s attention. Viral Twitter threads documented dozens of consecutive days of these synchronized crashes during low liquidity hours, when minimal trades can disproportionately impact price.

The theory gaining traction is that Jane Street uses its privileged AP status and trading algorithms to orchestrate these coordinated sell-offs, profiting from short positions opened in advance and buying back at lower prices, squeezing other traders caught in the liquidation cascade.

How the Alleged Market Manipulation Works

1. Buy spot Bitcoin: Acquire Bitcoin at around $68,000.
2. Open huge short positions: Place large bets that Bitcoin’s price will drop, using derivatives or other exchanges.
3. Trigger a market sell-off: Use algorithms to sell large blocks of Bitcoin at 10 a.m., during low liquidity, igniting panic selling.
4. Profit from the crash: Bitcoin price falls to around $62,000, causing liquidations, while gains on short positions outpace losses on spot Bitcoin sales.
5. Close out shorts: Secure large profits as the price bottoms.
6. Buy cheaper Bitcoin again: Push price back up by purchasing at lower levels, creating a short squeeze and encouraging new buyers.

The result is months of Bitcoin price movement that look sideways—giving an illusion of calm—while in reality a sophisticated trading choreography takes place behind the scenes.

When the Lawsuit Came Out, the Drops Disappeared

The story took a dramatic turn on February 23, 2024, when Jane Street was sued for allegedly using insider information to profit from the collapse of Terra, a $40 billion crypto project that imploded in 2022. Immediately after the lawsuit became public, Bitcoin surged 10% within 48 hours. Perhaps most strikingly, the notorious 10 a.m. price drops vanished entirely.

Alongside this, $213 million worth of Bitcoin short liquidations occurred in a single day, and BlackRock’s IBIT ETF saw a $250 million inflow—ending a brutal five-week stretch of multi-billion dollar outflows. The timing is hard to ignore.

A Pattern of Manipulation Spanning India, China, and Terra

The suspicions around Jane Street aren’t new. In mid-2023, India’s Securities and Exchange Board (SEBI) barred Jane Street from its derivatives market after uncovering a manipulation scheme dubbed “morning pump, afternoon dump.” Regulators found Jane Street exploited predictable price moves by artificially pushing stock prices up in the morning and profiting as they reversed positions by afternoon, in a strategy remarkably akin to the alleged Bitcoin maneuvers.

SEBI froze $566 million of Jane Street’s assets as a result. Meanwhile, Chinese regulators have flagged Jane Street-linked accounts for suspected manipulation of silver prices through ETF holdings—another instance of this firm’s shadowy influence on markets worldwide.

Turning to Terra, the 2024 lawsuit alleges that a former Terraform Labs intern, who had private knowledge about the inner workings of the Luna and UST tokens, joined Jane Street and leaked insider information. Using this, Jane Street allegedly orchestrated trades that capitalized on Terra’s implosion. The crash saw Luna’s price fall from $80 to near zero in 72 hours, wiping out $40 billion and devastating countless investors.

A Troubling Tangent: Weaponry, War, and Crypto Collusion

Beyond market manipulation, Jane Street’s saga includes unsettling geopolitical entanglements. One co-founder reportedly wired $7 million used to purchase AK-47s, Stinger missiles, and grenades involved in a coup attempt in South Sudan. The U.S. Department of Justice has verified these ties.

Notably, Sam Bankman-Fried, the disgraced founder of FTX, previously worked at Jane Street, as did several of his eventual FTX colleagues, hinting at a larger network of complex financial and crypto relationships.

Why This Matters: The Financial Industrial Complex Meets Bitcoin

Bitcoin, at its inception, was designed to operate outside traditional financial systems—decentralized, transparent, and resistant to centralized control. Yet, as the crypto space matures, it increasingly intersects with Wall Street’s infrastructure. The creation of ETFs, authorized participants, and large institutional players like Jane Street foists Wall Street’s opaque and powerful mechanisms directly into Bitcoin trading.

This fusion means that the very trusted model Bitcoin promised may be compromised when accessed through financial vehicles like ETFs. Prices become potentially subject to strategic moves by powerful actors who hold the keys to creating, redeeming, and hedging ETF shares beyond public scrutiny.

For investors, this is a cautionary tale. While buying Bitcoin through ETFs offers convenience, it also places trust in a financial system that can manipulate prices. On the other hand, holding Bitcoin in personal wallets with self-custody — the “not your keys, not your Bitcoin” ethos — shields individuals from such market maneuvers. Your Bitcoin can’t be liquidated or manipulated if you hold your own keys.

Despite the drama, Bitcoin remains a revolutionary asset for our generation. The message here is a nuanced one: vigilance and education are critical in navigating crypto’s intersection with the financial complex.

If you want to dive deeper into self-custody, Andrei Jikh has a comprehensive four-hour beginner’s guide with a discount code ‘Andre40’—a valuable resource for anyone serious about owning Bitcoin on their own terms.

Watching the Market—and the Lawsuit—Unfold

Jane Street has yet to respond to the allegations officially. The lawsuit and regulatory proceedings will reveal more. Meanwhile, data analysts provide alternative perspectives, arguing that Bitcoin’s 10 a.m. moves reflect natural market repricing aligned with the U.S. stock market open or purely neutral hedging strategies, not manipulation.

But given the firm’s past in India and alleged roles in multiple high-profile market disturbances, skepticism is warranted.

Ultimately, this is a story about the clash between the old financial industrial complex and a new, decentralized vision of money. As Jane Street quietly wields a massive sword over Bitcoin’s price, the broader question lingers: can the promise of honest money survive when powerful, secretive firms hold so many of the financial keys?

For those seeking clarity, watching Bitcoin’s price around 10 a.m. Eastern and tracking legal developments could be key to understanding how far this narrative will unravel.