Bitcoin falls to $65k; traders buy protection to $50k

Bitcoin fell to about $65,400 over the past day, triggering roughly $1.8 billion in liquidations and erasing bullish leverage. The decline pushed demand for options protection toward the $60,000 and $50,000 strikes.

The fall followed a failed recovery from last week’s selloff. Bitcoin briefly rallied toward $73,400 after reports of de-escalation over naval blockades in the Strait of Hormuz, but the bounce lacked meaningful spot volume and collapsed after Iran denied negotiations and disputed public claims about uranium. When the $70,000 area broke, automated liquidation systems accelerated unwinds of undercollateralized long positions, driving the price down to a low near $65,404.

MicroStrategy confirmed a sale of 32 BTC for about $2.5 million to fund cash distributions and dividend payments on preferred stock. The company had been viewed as a steady corporate buyer; the sale altered that perception. Jeff Dorman, chief investment officer at Arca, warned: “From a sentiment standpoint, how do you think the average Bitcoin investor is going to react when every major news outlet and social media influencer starts writing that ‘MicroStrategy is now a seller of BTC’? This company has bought over $50 billion of Bitcoin, and currently owns roughly 4% of the total 21 million outstanding.”

Institutional demand through spot Bitcoin exchange-traded funds weakened, with about $4 billion in outflows over the last four weeks. Market participants pointed to a rotation of capital into artificial-intelligence-related opportunities and large private-market IPOs as a factor in the redemptions.

Analysts said gains tied to AI and expectations for major IPOs drew allocations away from crypto, reducing the steady ETF inflows that had previously absorbed sell pressure. Independent analyst Matthew Case described the pattern as an “AI IPO liquidity vacuum,” where institutions reallocate funds toward companies such as SpaceX, Anthropic and OpenAI.

Options positioning data show roughly $1.2 billion in open interest at the $60,000 strike and about $600 million at the $50,000 strike, a combined $1.8 billion at those levels. Traders buying puts and constructing collars concentrated on downside insurance rather than leveraged bets on a quick return above $70,000.

Earlier in the rally, steady ETF inflows and large corporate accumulation had allowed traders to treat pullbacks as buying opportunities. With ETF bids reduced and MicroStrategy’s sale removing a prominent buyer, market participants are buying downside protection and looking toward support nearer $60,000 and, for some, $50,000.