Bitcoin traders warn that the $60,000 limit is a liquidation trigger

As Bitcoin struggles to climb out of its current funk, several indicators suggest that any breakout of the $60,000 level would unleash a new bout of extreme turbulence. The largest cluster of bets in Bitcoin’s options market are contracts that pay off if the price falls below $60,000, according to Deribit data. Just below that level is the token’s 200-week moving average – currently just above $58,000 – which some technical analysts see as crucial support.

Many Bitcoin-backed loans are structured so that if the price falls to that level, lenders automatically sell the collateral to cover losses, said Maxime Seiler, CEO of digital asset trading company STS Digital. That forced sale would drive prices down, causing a cascade of debt to disappear. Bitcoin briefly flirted with $60,000 on February 6 before staging a modest recovery. “$60,000 is the most important level to watch,” Seiler said. “A break below $60,000 could trigger forced deleveraging and hedging flows, creating a cascading effect. In that scenario, volatility would likely rise sharply as liquidations accelerate and traders rush to protect downside exposure.”

Bitcoin was trading around $67,000 in New York on Friday, down about 47% from its October peak. The reversal began late last year, when more than $19 billion in bullish bets were wiped out in a violent firestorm that ended a powerful rally. Since then, prices have struggled to regain their footing. Sales surged again in early February, wiping out all gains since the re-election of pro-crypto US President Donald Trump.

There is no shortage of bearish scenarios roiling crypto sentiment right now. Michael Burry, who rose to fame for betting against the US housing market ahead of the 2008 financial crisis, recently warned that Bitcoin’s plunge could deepen into a self-reinforcing “death spiral.” Standard Chartered this week cut its price forecast for the end of 2026 to $100,000, two-thirds less than two months ago. StanChart analysts led by Geoffrey Kendrick said the native cryptocurrency could crash to $50,000 before stabilizing. That is also the level with the second highest level of open interest for put options, according to Deribit.

‘Everyone is bearish’

“Everyone we speak to is bearish on the “short term” (however they define it), so that says a lot about sentiment and positioning,” said Augustine Fan, partner at Hong Kong-based crypto options platform SignalPlus.A put option contract gives the holder the right, but not the obligation, to sell a specified asset at a predetermined price on or before a specified expiration date. If Bitcoin falls toward or below $60,000, traders who sold these puts could hedge their exposure by selling Bitcoin or futures, which could create further downward pressure.

Open interest in $60,000 amounts to $1.24 billion, according to Deribit data.

The crypto ecosystem’s influence is fragmented and largely offshore, making a specific liquidation trigger difficult to pinpoint. Still, market participants point to certain collateral ties as potential fault lines.

Seiler and IG Australia analyst Tony Sycamore are among those pointing to Bitcoin’s 200-week moving average as a key support level – one that, if broken, could trigger a correction of almost another 20%, according to Sycamore.

“A sustained break below the critical $60,000/$58,000 zone would likely open the door for a deeper pullback to the next support level in the high $40,000s,” Sycamore said in a note on Friday.

Elsewhere in the market, shares of Coinbase Global Inc. rose. in early trading, as investors looked past the stock market’s fourth-quarter earnings shortfall as Bitcoin moved higher. Even after the rebound, the stock remains down about 50% over the past twelve months.