Bitcoin’s price tested below the $60,000 level — a figure that market participants consider a critical support zone. The sell-off comes alongside record outflows from exchange-traded funds.
Jean-David Péquignot, Chief Commercial Officer at options exchange Deribit, explained why this level carries real consequences for institutional investors and participants in the derivatives market.
The Entry Price Problem
A significant share of institutional capital — including ETF buyers, large holders, and short-term speculators — accumulated Bitcoin in the $60,000–$67,000 range over the past year. Now that the asset is trading within that corridor, many of those buyers are sitting near their break-even point.
A further decline would increase unrealized losses and make holding the asset more costly, especially as technology stocks and AI-related companies continue to post strong gains. According to Péquignot, once the price falls below investors’ entry levels, mounting unrealized losses encourage panic selling, while the opportunity cost of holding Bitcoin rises against the backdrop of a booming AI-driven stock market.
Michael Saylor, founder of Strategy, also pointed to capital rotation as a key factor behind the recent decline. According to him, investors have poured a record $400 B into AI infrastructure over the past six months, contributing to $4 B in outflows from Bitcoin ETFs as institutional investors chase technology stocks.
The Derivatives Problem
This is where market mechanics come into play. On Deribit, open interest in put options with a $60,000 strike price exceeds $1.2 B in notional value. These contracts pay out if Bitcoin falls below that level, and investors purchased them as protection against a prolonged sell-off.
The challenge is that market makers on the opposite side of those trades are short puts — or, more precisely, short gamma. As Bitcoin approaches $60,000, they may be forced to sell spot positions or futures contracts to rebalance their books. All else being equal, this hedging activity can accelerate the decline, turning an orderly pullback into a more chaotic sell-off.
Péquignot also pointed to an excessive amount of leveraged long positions across the market. A break below $60,000 would weaken collateral metrics and could trigger a cascade of automatic liquidations, adding further downward momentum. Leveraged long positions in Bitcoin and other tokens have already been liquidated for billions of dollars over the course of this week.
Michael Saylor’s Position
Saylor is urging market participants not to panic. He believes the recent decline is not the result of a structural problem with Bitcoin but rather the consequence of Wall Street’s focus shifting toward the technology sector.
His company sold 32 BTC worth $2.5 M to finance payments on preferred shares, a move that unsettled the market. However, Strategy still holds 843,706 BTC valued at approximately $53 B.
Saylor himself remains unfazed and continues to argue that volatility creates opportunities.