President Donald Trump’s renewed aggressive stance toward Iran has sent bitcoin down about 2% in the last 24 hours, to $67,000. While this price action is consistent with routine volatility, beneath the surface, the market structure appears fragile.
This is primarily due to flows into the Deribit-listed options market, specifically, a buildup of defensive positioning just below current prices that could result in a drop to $50,000.
A fragile setup below $68,000
In recent weeks, traders have been accumulating put options that offer downside protection. These defensive flows have been concentrated in put options at strike levels of $68,000 and below, down to the mid-$55,000s. This is understandable, given the macroeconomic risks of the Iran war, quantum threats, and the brutal bear market that began late last year.
However, when this type of positioning is constructed, it creates what smart traders call a “negative gamma” zone: a setup in which market makers or traders adding liquidity to an exchange’s order book are forced to react to price movements in ways that end up accelerating the prevailing trend, which in this case is bearish.
These types of dynamics have amplified both bullish and bearish trends in the past.
Glassnode’s chart shows that the dealer’s gamma exposure is mostly negative, at $68,000 to $50,000. This is the result of being on the opposite end of traders’ long selling positions.
In other words, dealers hold short selling positions. So as the market falls below $68,000, they face losses and are likely to short BTC to cover their exposure.
This hedging can drive prices down even further, creating a feedback loop that can accelerate quickly.
That is why the latest drop below the $68,000 level becomes critical. Breaking below that threshold not only indicates technical weakness: it opens the door to an area where forced selling could intensify.
“Negative range is building up just below current price levels from $68,000 to mid-50s,” Glassnode said in its weekly report.
“A move towards this zone could trigger accelerated selling as hedging flows reinforce bearish momentum, turning what would otherwise be a gradual move into a steeper price revision, with a possible revision of the $60,000 level, the nadir of the February 5 sell-off,” the firm added.
Given that liquidity remains relatively tight following the options expiry on March 27, and will likely remain tight through the Easter holidays, there may not be enough buyers to absorb that pressure.
Therefore, if the feedback loop fully activates, the decline could extend well below $60,000.
This setup shows that while Bitcoin is currently reacting to war headlines, the internal workings of the market may also shape its trajectory.
If prices stay above $68,000, the current setup can be undone without much damage. But a sustained break below that level could turn the market into a regime where selling feeds on itself, turning a routine decline into a much deeper move.
