Bitcoin continues to stall amid record ETF outflows, with the price rapidly approaching $60,000.
The $60,000 level is widely cited by analysts as a key support level, below which the decline could worsen further.
Jean-David Pequinho, chief commercial officer at leading crypto options exchange Deribit, said price is important not just because it is a rough psychological level. More importantly, this is a structural threshold with real implications for financial institutions and derivatives market participants.
cost-based issues
Pequinho said a large portion of institutional money, made up of ETF buyers, large holders and short-term speculators, bought Bitcoin over the past year at prices between $60,000 and $67,000.
With the largest cryptocurrencies currently trading in that range, these buyers are at or near cost basis, essentially breaking even. As prices fall further, unrealized and paper losses increase, making holdings more valuable, especially when AI stocks and other parts of the traditional market are rising like there’s no tomorrow.
“When prices fall below cost basis, the resulting unrealized losses can prompt a hasty sale, especially as the opportunity cost of holding.” $BTC “It’s rising against a surge in the AI stock sector,” he said.
Michael Saylor, the prominent executive chairman of Strategy (MSTR), the largest publicly traded Bitcoin holder, also condemned the recent capital rotation. $BTC loss.
derivatives problem
After that it becomes mechanical.
At Deribit, $60,000 exercise put options have more than $1.2 billion in nominal open interest and will pay out if the price falls below that level. Investors bought them as a hedge against a prolonged decline.
The problem, however, is that the market makers on the other side of investors are currently making short puts, or more precisely, “short gamma.”
therefore, $BTC Nearing $60,000, market makers and dealers will be forced to sell spot $BTC Or make ends meet with futures. All else being equal, this hedge could accelerate the decline, turning an orderly decline into a chaotic one, Pequinho said.
He also noted that there are too many leveraged longs in the system, so a drop below $60,000 could lead to further liquidations and add to the downward momentum.
“As leverage has not yet been completely eliminated from the system, a drop below $60,000 could cause collateral metrics to deteriorate rapidly, triggering a cascading wave of automated long liquidations,” he said.
Long and bullish plays with billions of dollars of leverage $BTC and other tokens have already been liquidated this week.
