Deribit warns of cascading liquidations if price breaks key level
Bitcoin traded at $61,875.23 on Thursday, down 2.59% this week, as traders and analysts focus on $60,000 as a critical support level that could trigger institutional selling and derivatives-driven liquidations.
Jean-David Péquignot, Chief Commercial Officer at Deribit, the crypto options exchange, flagged the threshold as a pivot point for multiple market participants. “As price undercuts their cost basis, the resulting unrealized losses may incentivize rushed selling, especially as the opportunity cost of holding BTC rises against a surging AI equity sector,” Péquignot said.
Institutional buyers, including ETF purchasers and large holders, accumulated bitcoin between $60,000 and $67,000 over the past year. At current price levels, these positions sit near break-even, creating a psychological and financial pressure point. Record ETF outflows are already occurring, according to market data reviewed by Deribit analysts.
Michael Saylor, Executive Chairman of MicroStrategy (MSTR), the largest publicly traded bitcoin holder, attributed recent BTC losses to capital rotation as investors shift funds into other asset classes, particularly the AI equity sector.
The derivatives layer amplifies downside risk. Market makers on Deribit are short puts at the $60,000 strike, meaning they are obligated to buy bitcoin if the price falls below that level. To hedge this exposure, they sell spot BTC or futures contracts, creating a mechanical selling pressure as price approaches $60,000. Deribit data shows $1.2 billion in notional open interest in $60,000 strike put options.
Péquignot warned that a break below $60,000 could trigger a broader cascade. “With leverage still not fully flushed from the system, a break of $60K could rapidly worsen collateral metrics, triggering a cascading wave of automated long liquidations,” he said. Leveraged long positions have already been liquidated in significant volume this week.
The broader macro backdrop is deteriorating. The AI trade, which had buoyed sentiment in recent months, has faltered. Semiconductor stocks and Asian indexes have declined, reducing the perceived opportunity cost of holding bitcoin relative to equities.
If $60,000 fails to hold, the next support levels and the extent of liquidation cascades remain uncertain. Deribit did not specify historical precedent for $60,000 as a support level in previous market cycles or quantify total institutional exposure at the $60,000-$67,000 cost basis range.
