Bitcoin has hit a three-month low, erasing gains made after Donald Trump's election victory. Initially tied to Trump's policies and a recent hacking incident, analysts now point to a deeper cause.

Crypto expert Kyle Chasse attributes the market crash to the unwinding of a cash and carry trade by hedge funds, suppressing Bitcoin's price. The strategy involved leveraging Bitcoin spot ETFs and CME futures for low-risk returns. However, as this trade falters, significant liquidity is withdrawn, sending Bitcoin prices plunging.

As the cash and carry trade collapses, over $1.9 billion worth of Bitcoin has been sold, causing a drop in CME open interest and sharp declines in Bitcoin value. Hedge funds, focused on profit rather than Bitcoin's growth, are exiting the market rapidly, intensifying the sell-off.

While market fears initially centered on Trump's tariffs and recent hacking incident, the current crisis seems rooted in this cash and carry unwind. Chasse predicts more forced selling as hedge funds clear positions, expecting increased volatility and potential support around $70,000.

With 6.76 million addresses holding Bitcoin at $65,296, a stabilizing effect may occur in this support zone. The analyst suggests that amidst this reset, real long-term holders may steady the market, with potential for Bitcoin's future direction.