Bitcoin price approaches critical level of $60.000

The Bitcoin price is currently at $60K, a decline of 5.5% in the past 24 hours. This brings Bitcoin close to a level that market experts consider crucial. According to a senior executive at crypto derivatives platform Deribit, a break below $60.000 could trigger a chain reaction of selling and liquidations.

Bitcoin is available at OKX and Bybit.

$60.000 as a Pivot Point for Institutions and Derivatives

Jean-David Péquignot, Chief Commercial Officer of Deribit, explains why $60.000 is such an important price level. At that specific price level, there is as much as $1.2 billion in notional open interest in the form of put options on the Deribit platform. This makes it a key level for the entire derivatives market.

At the same time, $60.000 serves as the average cost price for many institutional players who entered earlier. The level thus combines two forms of pressure: both from the derivatives market and from large investors who want to defend their positions. The Bitcoin price is thus touching a historical bottom zone that has been under pressure for some time.

Cascade of Liquidations if Bitcoin Declines Further

A drop below $60.000 sets off a mechanical process, according to Péquignot. Market makers holding short gamma positions are then forced to hedge their exposure by selling spot or futures. This creates extra selling pressure precisely when the market is already vulnerable, CoinDesk reports.

On top of that comes the high use of leverage in the market. Due to increased leverage, even small price movements can trigger a wave of forced liquidations of long positions, deepening the decline. Only 55% of the Bitcoin supply is currently in profit, indicating how fragile the current market situation is. Also, Bitcoin ETFs have seen outflows for 13 consecutive days, a sign that sentiment among investors is deteriorating further.