President Donald Trump’s renewed aggressive posturing toward Iran has pushed bitcoin lower by roughly 2% over the past 24 hours to $67,000. While this price action is consistent with routine volatility, beneath the surface, market structure looks fragile.
This is mainly due to flows in the Deribit-listed options market, specifically, a build-up of defensive positioning just below current prices that could result in a slide all the way down to $50,000.
A fragile setup below $68,000
In recent weeks, traders have been loading up on put options offering downside protection. These defensive flows have been concentrated in put options at strike levels $68,000 and lower, all the way down to mid-$55,000s. This is understandable, given the macroeconomic risks from the Iran war, quantum threats and the brutal bear market that began late last year.
However, when this kind of positioning builds, it creates what savvy traders call a “negative gamma” zone – a setup where market makers or dealers who add liquidity to an exchange’s order book are forced to react to price moves in ways that end up accelerating the prevailing trend, which is bearish in this case.
These kinds of dynamics have amplified both bullish and bearish trends in the past.
BTC: options gamma exposure on Deribit. (Glassnode)
The Glassnode chart shows that dealer gamma exposure is mostly negative from $68,000 to $50,000. This is the result of being on the opposite end of traders’ long put positions.
In other words, dealers are holding short put positions. So, as the market drops below $68,000, they face losses and are likely to short BTC to hedge their exposure.
This hedging can push prices even lower, creating a feedback loop, which can accelerate quickly.
That’s why the latest drop below the $68,000 level becomes critical. The break below that threshold doesn’t just signal technical weakness — it opens the door to a zone where forced selling could intensify.
“Negative gamma is now building just below current price levels, from $68K all the way down to the high 50s,” Glassnode said in its weekly report.
“A move into this zone could trigger accelerated selling as hedging flows reinforce downside momentum, turning what would otherwise be a gradual move into a sharper repricing, with a potential revisit of the $60k level, the bottom of the February 5 selloff,” the firm added.
With liquidity still relatively thin following the March 27 options expiry, and likely to remain thin over the Easter holidays, there may not be enough buyers to absorb that pressure.
So, if the feedback loop fully kicks in, the decline could extend well below $60,000.
This setup shows that while bitcoin is currently reacting to war headlines, the market’s inner workings can also shape its trajectory.
If prices hold above $68,000, the current setup may unwind without much damage. But a sustained break below that level could flip the market into a regime where selling feeds on itself, turning a routine dip into a much deeper move.
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