Dovey Wan: The circle in Hong Kong is very small, I haven't heard of any institution getting into trouble

Dovey Wan, founding partner of Primitive Ventures, posted on X regarding the rumor that "the market drop may be due to a Hong Kong hedge fund's liquidation from IBIT options trading." Being in the "Hong Kong fund" circle in Asia, I have to share a contrary opinion.

1. About taxes: Hong Kong does not have capital gains tax (Cap Gains) at all, so the so-called "tax optimization harvesting" perspective is basically viewed from the American standpoint, which does not apply to us.

2. About the rumors: We are conducting due diligence (DD) on Hong Kong's largest Bitcoin options strategy fund. From their performance in recent months and our communications with them, there has been no drama since October 11. The Hong Kong circle is small, and everyone loves gossip; if something really happened, it would be impossible to keep it under wraps. For example, when the Hong Kong-based 3AC-related market maker Taipingshan faced issues, we knew about it almost the next day.

3. About capital flows: Long before the in-kind redemption mechanism appeared, many old-school Bitcoin whales in Asia had already swapped their assets one way into compliant channels like IBIT (at that time, only Galaxy could do this; those who understand know). This was mainly done to: ensure safer custody; reduce operational and counterparty risks; facilitate collateral flow within the traditional financial (TradFi) system; and allow for cleaner transitions to other traditional financial assets.

4. About trading habits: Starting from the second half of 2025, Bitcoin trading activity will structurally lean more towards U.S. stock trading hours (especially the early morning session when New York opens), and the spot selling pressure across major exchanges reflects this. In recent days, Binance has also seen significant spot selling pressure during these times, which is actually a chain reaction caused by ETF redemptions.

Additionally, why would a Bitcoin fund "blow up" just because of writing options? Unless they are naked shorting or engaging in leveraged basis trades, resulting in liquidation due to an unexpected widening of the price difference between IBIT and spot. Therefore, it is likely that this is a traditional financial (TradFi) fund with a cross-margin mechanism, rather than a purely "old-school Bitcoin believer" fund.