BIT Weekly Market Observation: Halved from Peak, Panic Doubled. $60,000 is the Only Lifeline

Six bearish factors are simultaneously fermenting and amplifying each other, not exerting independent influence. At the start of this week's morning session, Bitcoin fell from $73,396, hitting an intra-week low of $61,351 on Thursday, the lowest since February, nearly halving from its all-time high of $126,210.50 in October. Ethereum led the decline this round, plunging 16% for the week to around $1,683. After the price approached $60,000 (the largest put support barrier on the options board), both major cryptocurrencies staged a modest 24-hour rebound: Bitcoin futures rose 2.75%, and Ethereum rebounded 5.71%. Market panic has not completely dissipated, but risks can now be hedged and priced using tools.

Six Overlapping Risks Trigger Deep Correction

Direct Trigger: MicroStrategy's First Bitcoin Sale in Over Two Years

For the first time since December 2022, MicroStrategy sold Bitcoin, offloading 32 coins (total value approximately $2.5 million, average transaction price $77,135) to fund preferred stock dividend payments. The reduction accounts for just 0.004% of its total holdings of 843,706 coins, and the transaction price was above its cost basis, resulting in a profitable exit.

The actual selling pressure was minuscule, but the symbolic shock was immense: Saylor has long held the core belief of only buying and never selling Bitcoin. The breach of this conviction caused market panic to spread rapidly—even the most steadfast institutional giant began reducing positions. Over the following week, whales sold approximately 25,000 Bitcoins in total, and retail panic selling further exacerbated the decline. When Bitcoin's price fell to $63,083, MicroStrategy's overall holdings fell into unrealized losses, as its average cost basis is $75,699, meaning a paper loss of over $10,000 per coin.

ETF Outflows Exacerbate Weak Market Conditions

From May 15 to June 3, spot Bitcoin ETFs experienced net outflows for 13 consecutive trading days, setting a new record for the longest outflow period since the product's launch in January 2024, with cumulative capital flight of approximately $4.4 billion. Over the three weeks, total ETF AUM shrank from $104.29 billion to $82.83 billion.

BlackRock's IBIT accounted for 75% of the total outflows, reaching $3.3 billion. Fidelity's FBTC saw outflows of $456 million, and Grayscale's GBTC had outflows of $303 million. On June 4, the outflow trend paused briefly with a small net inflow of $3.05 million, but this was merely a temporary halt, not a trend reversal. Bloomberg analyst Eric Balchunas stated that the sustained outflows have turned cumulative net flows for the year 2026 negative, though the overall cumulative net inflow since product launch remains positive at around $55 billion.

Four Other Macro and Geopolitical Risks Coincide to Amplify the Decline

1. Large wallet transfers by Mt. Gox exchange rekindled market concerns about selling pressure.
2. The macro environment remains persistently bearish: inflation is stickier than expected, significantly cooling market expectations for rate cuts (Polymarket shows a 66% probability of zero rate cuts in 2026), a strengthening U.S. dollar, and rising Treasury yields. Capital continues to flow into the AI and tech sectors. U.S. stocks hit new highs this week, diverging sharply from the cryptocurrency trend.
3. On June 5, Hezbollah rejected Israel's ceasefire proposal, increasing geopolitical uncertainty in the Middle East, compounded by unresolved U.S.-Iran tensions.
4. A single factor is unlikely to significantly suppress prices. Without any bullish catalysts, the confluence of multiple bearish forces led to a deep correction.

Derivatives Data Signals and Core Interpretation

Implied Volatility (IV) Rises After Second Trough, Signaling a Peak

During the phase of the second decline to lower levels, implied volatility surged again; Bitcoin's at-the-money near-month option IV for June 26 rose to 47.47% (up 4.14 percentage points), while Ethereum's near-month IV soared to 64.38% (up 10.68 percentage points, with volatility elasticity approximately 2.6 times that of Bitcoin). On June 9, short-term near-end IV briefly touched 65.82% for Bitcoin and 83.50% for Ethereum.

Intraday, the Bitcoin DVOL volatility index spiked to 55, closing at 48.06, down 2.65% on the day. Ethereum's DVOL closed at 66.31, slightly down 1.34% on the day. Both volatility indices maintained high levels while turning downwards synchronously, a classic signal of a phase top in IV: the market frantically bought short-term put protection at low prices, followed by some unwinding of positions to relieve pressure.

Implied Skew Curve Shows Key Divergence Structure

The clearest data indicator this week is the skew term structure: the near-end of the board is filled with extreme bearish panic. On June 9, the effective near-term Skew for Bitcoin was -17.96, and for Ethereum -19.58. The 10Delta deep out-of-the-money put skew deteriorated more significantly, reaching -33.35 and -40.61 respectively—as the price neared the $60,000 mark, the market was willing to pay extremely high premiums for short-term downside protection.

The forward curve showed significant recovery and turned bullish: Bitcoin's September, December, and March next year forward Skew turned positive (an increase of +0.77 to +1.83 percentage points). Ethereum's forward curve also turned positive after August. The curve shifted from last week's deep bearishness across the board to a steep structure characterized by 'extreme near-term panic, forward pricing recovery'.

This is a standard divergence pattern in the middle of a downtrend: short-term panic dominates the board, but the forward derivatives market has already started pricing stabilization 3 to 6 months out. Practical impact on structured products: the cost of forward downside protection decreases, making the construction of long-protection-period Collar and Bullish Seagull structures significantly more cost-effective in terms of returns.

Institutional Block Trades Completely Reverse from Defensive Hedging to Buying the Dip

Last week, institutions were generally in defensive mode, with buying put options accounting for 33.3%, the highest proportion. This week, the wind completely reversed: the proportion of block trades selling put options surged to 42.0% (a seq. increase of +14.1 percentage points), and buying call options rose to 33.0% (a seq. increase of +24 percentage points). Buying put options halved to 17.3%, and selling call options dropped to 7.6%. Retail operations converged similarly, with retail investors selling put options ranking first at 30.1%.

Institutions switched from actively buying protection and hedging to selling protection and positioning to buy the dip at lower levels—concentrating on aggressively selling PUTs and buying CALLs near the $60,000 put barrier. Combined transaction data supports this trend: 44.2% of institutional Bitcoin block trades were put spread strategies (selling near-term PUTs, buying deeper OTM PUTs to cap downside). Essentially, this involves collecting premiums at the $60,000 mark while establishing a controlled-risk bottom position.

Bitcoin and Ethereum perpetual funding rates remained neutral throughout the process (BTC 0.000%, ETH -0.006%), indicating orderly deleveraging without cascading liquidations, suggesting clearly defined risk levels.

Bullish, Bearish, and Neutral Comprehensive Assessment

Bullish Thesis

1. Market panic has found structural boundaries: the massive $60,000 put open interest barrier (approximately 19,000 contracts, the highest across the entire board) is attracting genuine institutional capital. Institutions selling PUTs and buying CALLs at this level is equivalent to bottom-fishing via options—collecting premiums while committing to buy at $60,000, and simultaneously purchasing calls to capture any rebound.
2. The Fear and Greed Index has fallen to cyclical lows. Historically, this value often precedes a rebound environment (not a direct trigger for an uptrend, but the underlying conditions are in place). Long-term holders have not engaged in mass panic selling. The current selling pressure comes from short-term whale position reductions and ETF outflows, not from long-term holders capitulating. Exchange inventory levels remain low.
3. The 13-day consecutive ETF outflow streak has paused. Key positive catalyst: MicroStrategy announced reserving $1 billion in cash for preferred stock dividend payments, completely severing the link between dividend payments and Bitcoin sales. The sale of 32 coins was a one-time confidence shake, not a regularized selling pressure.
4. Forward Skew is recovering, with the derivatives market pricing in stabilization over a 3-6 month horizon. If spot prices hold the $60,000 level and the June 10 U.S. CPI data does not show an unexpected upside surprise, all conditions for technical stabilization could be met.

Bearish Downside Risks

1. The second leg down is not confirmedly complete. The current price of $63,083 still has 4.9% downside to the $60,000 put barrier. If broken, gamma effects and the magnetic pull of the put barrier could accelerate the decline. The next major put support levels are $55,000 (10,800 contracts) and $50,000 (12,500 contracts).
2. Ethereum's selling pressure is stronger than Bitcoin's: Ethereum's forward futures have turned from a premium of 6.52% last week to a deep discount of 9.49%. Perpetual funding rates are slightly negative. The ETH/BTC near-month volatility ratio reached a cyclical high of 1.356, indicating Ethereum has greater downside elasticity and is weaker overall.
3. MicroStrategy's semi-monthly dividend payment mechanism is now established, meaning there will be consistent, albeit small, Bitcoin selling pressure going forward.
4. The June 10 CPI release and the June 16-17 FOMC meeting (the first with Warsh's dot plot) are two major macro catalysts that could swing the market anytime. Before the $60,000 support is confirmed, premature large-scale bottom-fishing carries the risk of enduring a deeper correction.

Neutral Comprehensive Assessment

The panic-driven market has reached an identifiable structural node. The $60,000 level is the single most critical price point in the current market: it's not just a psychological round number, but the core node aggregating the largest options open interest, institutional bottom-fishing capital, and the binary dividing line for market bulls and bears. Holding this level provides a foundation for stabilization; breaking below it would shift the focus to the next gamma cluster at $55,000.

The institutional shift from defense to bottom-fishing is the most critical signal in the entire dataset. However, the proportion of block trade volume has fallen from 46.3% to 16.3%, suggesting that while the directional judgment is correct, overall conviction for entry is not yet fully committed. The strategy should involve phased deployment. The market trajectory has only two paths: a firm hold at $60,000 or a break below $60,000; all subsequent developments will be determined by this.

BIT Practical Views

Priority Allocation: Collar Strategy, the Primary Hedging Tool This Week

The core purpose is not to chase high yields, but for asset risk protection. The recovery in forward Skew lowers the cost of long-term downside protection, while short-term IV remains high, improving the cost-benefit ratio of selling calls. This provides the best entry window for a Collar strategy in several weeks. The market still faces the possibility of testing and breaking below $60,000. Before the two major catalysts—CPI (June 10) and FOMC (June 16-17)—repricing risk, constructing a Collar strategy without additional margin requirements locks in the maximum downside loss in advance. There is no need to wait for market clarity; the core value of the Collar strategy is to control risk steadily without needing a precise market direction forecast.

Phased Bottom-Fishing Deployment: Build Positions in Stages Around the $60,000 Level

At the current price of $63,000 with high volatility, the premium income from selling PUTs is at cyclical highs, making it suitable for three types of structured products: Fixed Coupon Notes (FCN), Dual Currency Products (DCP) for buying low, and Discount Accumulators. A Bullish Seagull is also suitable: using USDT as principal, setting the conversion price at $60,000 or lower. If the price tests the put barrier, coins can be acquired at an even lower cost basis, and a standard high annualized return can be achieved upon market recovery.

Institutions are already selling PUTs to bottom fish at the $60,000 level. The Bullish Seagull's layered returns perfectly mirror this smart money approach: hold the note and collect yield while waiting, and the product inherently provides a lower phased entry price. Strictly control the size of individual positions, reserve buffer space for further downside, and only increase position size after the price firmly holds above $60,000.

Volatility Sellers Can Start Testing the Waters Gradually, But Not Yet Appropriate for Heavy Positions

The IV peak signal is valid: DVOL pulled back intraday, extreme near-end Skew values historically tend to revert to the mean quickly, and institutions have already started selling PUTs aggressively. The yield income from selling Ethereum volatility, in particular, is at a cyclical peak.

However, the appearance of a topping signal does not confirm the top; actual volatility could still spike again. Naked shorting volatility, directly exposing oneself to gamma risk by betting on the $60,000 support, CPI, or the FOMC meeting is pure speculation. Following the conservative institutional approach: use spread structures to sell PUTs (selling near-term PUTs, buying deep OTM PUTs to cap maximum loss), with small position sizes for testing. Only increase the volatility selling position size after spot prices firmly hold $60,000 and the DVOL continues to decline.

For Holders Planning to Reduce Positions and Take Profits: Current Price Level is Not Suitable for Large-Scale Selling

After a deep correction, the reasonable execution prices for high-price selling structures (Decremental Accumulator DQ, Bearish FCN, High-Price Selling DCP) have moved significantly lower. Panic selling at $63,083 will only amplify actual paper losses. If a rebound occurs back to the previous support-turned-resistance at $72,000, or near the $80,000 call barrier, consider deploying reduction structures in stages. The optimal approach at this stage is to hold the core position plus a matching hedging strategy.

Summary

Six bearish factors simultaneously resonated and impacted the market. After absorbing the risks, the market formed a substantive options support barrier at the $60,000 level.

Priority of actions: First, construct a Collar strategy for risk control. Second, phase-in bottom-fishing accumulation near the $60,000 level. Third, only deploy large-scale volatility selling for profit after confirming the bottom has stabilized.