Bitcoin: Why traders are betting big on a $40,000 crash

Is the key $60,000 support level in danger?

Bitcoin (BTC) is navigating through turbulent waters. Currently trading around $67,100, the queen of cryptocurrencies is struggling to reassure investors after a severe correction from its October highs. But it’s in the shadows of the derivatives market that concern is growing: the put option at $40,000 has become the second largest position in terms of open interest for the February expiry.

This aggressive positioning on such low strike prices reflects growing demand for downside protection. Institutional traders appear to be fearing a major liquidity event or final capitulation that could drive the price well below current support levels.

Is the key $60,000 support level in danger?

Bitcoin’s technical structure has weakened. After losing nearly 50% of its value since its historic ATH above $120,000, BTC is testing the resilience of its holders. The massive accumulation of $40,000 puts suggests that large wallets are not ruling out a catastrophic scenario where the psychological $60,000 support would break brutally.

From a technical perspective, losing the $65,000 – $66,000 zone could open the trapdoor toward $52,000, a level often cited as a long-term accumulation zone (MVRV). Analyst Ali Martinez recently highlighted a drastic 72% drop in whale transactions, a sign that major players remain on the sidelines, leaving the market without an immediate safety net.

However, this needs to be nuanced: in the options market, a heavy concentration of puts doesn’t always mean the price will reach that level. These positions often serve as “hedges” for long portfolios. If the price holds, these options will expire worthless, which could paradoxically relieve selling pressure once the expiry passes.

Scenario: Final capitulation or bear trap?

Market sentiment is currently at extreme fear, a classic contrarian indicator. Historically, when the crowd and options bet heavily on a crash, the market tends to surprise in the opposite direction to inflict “Max Pain” on short sellers.

If Bitcoin manages to reclaim $70,000 before the end of the week, this wall of $40,000 puts will become obsolete, potentially forcing market makers to buy back spot to cover their positions, thus fueling a technical rebound. Conversely, a weekly close below $65,000 would validate the bearish scenario, turning fear into real panic.

According to trader Killa, a “capitulation” should occur by April, taking Bitcoin between $47,000 and $54,000. He notably adds that tensions under the sign of world wars could emerge “very soon”. Tension is therefore still very present in the markets and whale bets show it.

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