Jane Street's BTC Sell-Offs: Flow Analysis and Price Impact

Since early November, Bitcoin has declined during the first hour of U.S. trading in more than 60% of sessions, typically shedding up to 3% in that window. This recurring pattern, where overnight gains often disappear within minutes of the U.S. equity open, has fueled a persistent theory that Jane Street executed systematic Bitcoin sell-offs at 10 a.m. U.S. Eastern Time.

The narrative was reignited this week by Glassnode co-founders, who connected the algorithmic price drops to the firm's ongoing legal troubles. Their analysis highlighted the consistent timing and algorithmic signatures of these daily flash crashes, suggesting institutional-scale operations rather than retail activity. The claim intensified after an anonymous source reportedly told investor Mike Alfred that Jane Street had ordered an "immediate cessation" of the suspected 10 a.m. selling strategy.

The pattern allegedly halted recently, coinciding with a nearly 3% Bitcoin rally to around $65,000. This timing has sparked debate, with some attributing the stabilization to the rumored shutdown of the algorithmic sell-off, while others note that broader macro and technical factors, including a strong correlation with the S&P 500, also played a role.

Contrasting Institutional Flows

The alleged morning Bitcoin sell-offs by Jane Street are part of a broader, contrasting institutional move. While the firm is accused of dumping BTC at market opens, its own filings show it has been aggressively accumulating MicroStrategy (MSTR) shares. In its Q4 2025 13F filing, Jane Street boosted its MSTR position by 473%, now holding shares worth about $121 million. This is a stark divergence from other major funds like BlackRock and Vanguard, which divested billions in MSTR last year. The move is described by analysts as unusual, if not suspicious, given MSTR's function as a leveraged Bitcoin proxy.

This institutional shift away from regulated Bitcoin exposure is mirrored in the ETF complex. U.S. spot Bitcoin ETFs have seen five straight weeks of net outflows, totaling roughly $3.8 billion. This sustained selling pressure, which has extended to Ether vehicles, indicates a flight from listed Bitcoin exposure separate from the alleged Jane Street trading pattern. The outflows are concentrated, with BlackRock's IBIT alone shedding about $2.1 billion over that five-week period.

The bottom line is a bifurcation in institutional capital. Some players are reducing regulated BTC exposure through ETFs, while others appear to be using the same market structure to accumulate alternative Bitcoin proxies like MSTR. This divergence in flow direction-selling BTC while buying MSTR, and selling ETFs while potentially buying the underlying asset-highlights the complex, multi-layered nature of institutional positioning that goes beyond any single trading strategy.

Catalysts and Flow Watchpoints

The forward view hinges on three key flow signals that will validate or invalidate the current narrative. First, the legal overhang from the Terraform Labs lawsuit is a binary catalyst. A favorable ruling for Jane Street would remove a persistent source of market uncertainty, potentially clearing the air for more stable trading patterns. Conversely, an adverse outcome could reignite scrutiny and volatility.

Second, the most direct evidence of the alleged trading strategy is whether the 10 a.m. BTC sell-off pattern resumes. Its return would be the clearest signal that the suspected algorithmic operations are ongoing, directly impacting price action at market opens. The pattern's recent absence has coincided with a rally, making its reappearance a critical watchpoint for traders.

Finally, monitor the trajectory of ETF flows. The sustained five straight weeks of net outflows from U.S. spot Bitcoin ETFs, totaling roughly $3.8 billion, signals a flight from regulated exposure. A reversal of this trend-into sustained inflows-would indicate a fundamental shift in institutional capital allocation, independent of any single firm's trading strategy.