President Donald Trump’s new aggressive posture toward Iran has sent bitcoin down about 2% over the past 24 hours, to $67,000. While this price action is consistent with typical volatility, beneath the surface the market structure appears fragile.
This is primarily due to flows in the options market listed on Deribit, particularly a build-up in defensive positioning just below current prices that could result in a decline to as low as $50,000.
A fragile setup below $68,000
In recent weeks, traders have stocked up on put options offering downside protection. These defensive flows have been focused on puts at strike levels of $68,000 and below, up to around $55,000. This is understandable, given the macroeconomic risks related to the war in Iran, quantum threats and the brutal bear market that began late last year.
However, when this type of positioning develops, it creates what savvy traders call a “negative gamma” zone – a setup in which market makers or traders who add liquidity to an exchange’s order book are forced to react to price movements in a way that ends up accelerating the dominant trend, which is bearish in this case.
These types of dynamics have amplified uptrends and downtrends in the past.
The Glassnode chart shows that dealer gamma exposure is generally negative, from $68,000 to $50,000. This is the result of being the opposite of traders’ long positions.
In other words, traders hold short put positions. So as the market drops below $68,000, they incur losses and are likely to short BTC to cover their exposure.
This hedging can push prices even lower, creating a feedback loop that can accelerate quickly.
This is why the latest decline below the $68,000 level becomes critical. Crossing this threshold not only signals technical weakness: it opens the door to an area where forced selling could intensify.
“Negative gamma now sits just below current price levels from $68,000 into the 50s,” Glassnode said in its weekly report.
“A move into this zone could trigger an acceleration in selling as hedging flows reinforce bearish momentum, turning what would otherwise be a gradual move into a stronger revaluation, with a potential return to the $60,000 level, the February 5 sell-off low,” the firm added.
With liquidity still relatively low after options expire on March 27, and likely to remain so through the Easter holidays, there may not be enough buyers to absorb this 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 inner workings of the market can also shape its trajectory.
If prices hold above $68,000, the current pattern could collapse without much damage. But a sustained break below that level could tip the market into a regime in which selling feeds on itself, turning a routine decline into a much deeper move.
