Bitcoin is struggling to maintain its footing as it faces resistance at a critical support level, prompting warnings from analysts of potential steep losses should it fall further. The cryptocurrency, which has shown weakness in recent weeks, is being closely watched by investors as market volatility persists.
$1.24 BILLION IN OPEN POSITIONS
Data from crypto options exchange Deribit reveals a significant concentration of open interest in put options – contracts that profit when Bitcoin’s price declines below $60,000. The total value of these open positions amounts to $1.24 billion. This indicates a substantial bet against Bitcoin surpassing the $60,000 mark.
A move below this level could compel option sellers to sell Bitcoin or futures contracts to hedge their risk, potentially accelerating a downward spiral. The concentration of put options suggests a heightened sensitivity to price movements below $60,000.
SIGNIFICANT RISK BELOW $60,000
From a technical analysis perspective, the 200-week moving average is emerging as a key level to watch. Currently hovering just above $58,000, this indicator is viewed by long-term investors as a strong support point. The market is keenly aware of this technical level as a potential floor for Bitcoin’s price.
Maxime Seiler, CEO of digital asset firm STS Digital, highlighted that Bitcoin-backed loans are triggering automatic selling mechanisms in the vicinity of this level. “This could lead to a rapid unwinding of leveraged positions,” Seiler noted. These automated sales could exacerbate any price declines.
CHAIN REACTION POSSIBLE
Seiler emphasized that $60,000 is a critical threshold, stating that a sustained break below it could trigger forced deleveraging and hedging activity, sharply increasing volatility. “In such a scenario, volatility will rapidly increase,” he said. Bitcoin briefly approached this level on February 6, but then experienced only a limited rebound.
Bitcoin, trading around $67,000 in New York, has lost approximately 47% of its value since reaching its peak in October. This sharp reversal followed the liquidation of over $19 billion in long positions late last year, signaling an end to the strong rally.
47% DECLINE FROM PEAK
The selling pressure resurfaced in early February, erasing much of the gains achieved after the re-election of crypto-friendly U.S. President Donald Trump. The market’s reaction underscores the sensitivity of cryptocurrency prices to political and economic developments.
“DEATH SPIRAL” WARNING
Michael Burry, an investor known for his pre-2008 financial crisis predictions, cautioned that Bitcoin’s decline could turn into a self-reinforcing “death spiral.” This warning reflects concerns about the potential for cascading liquidations and a loss of investor confidence.
Meanwhile, Standard Chartered has lowered its Bitcoin price forecast for the end of 2026 to $100,000. The bank’s analysts anticipate the price could fall to as low as $50,000 before stabilizing. This revised forecast suggests a more cautious outlook for Bitcoin’s near-term performance.
SHORT-TERM DECLINE EXPECTED
Augustine Fan, a partner at Hong Kong-based crypto options platform SignalPlus, reported that market sentiment is overwhelmingly bearish. “Everyone we’ve spoken to is expecting a decline in the short term. This clearly shows how negative the sentiment has become,” Fan stated. This widespread negative outlook could contribute to further downward pressure on prices.
NEXT SUPPORT LEVEL?
Analysts suggest that a definitive break below the $60,000–$58,000 range could trigger an additional correction of up to 20% in Bitcoin. In this scenario, the price is likely to target the next support region above $40,000. The potential for a significant correction highlights the risks associated with investing in Bitcoin.
