A dangerous structure is being observed in the decline of Bitcoin price.

Increasing leverage in the Bitcoin (BTC) derivatives market is creating a dangerous structure that could deepen price declines. In the past week, Bitcoin's price has fallen by 14%, dropping to $89,183, the weakest level seen since April. According to K33 research, open positions on the derivatives side have increased by 36,000 BTC in one week, marking the fastest rise since April 2023.

K33 Chief Researcher Vetle Lunde points out that this increase coincides with rising funding rates, indicating that these positions are not defensive but rather aggressive long positions added with the hope of buying the dip. However, as the expected counter-reaction has not occurred, the risk of sudden moves due to liquidation has increased due to the accumulated leverage in the market. Lunde emphasizes that with the increased appetite for long positions, there is a possibility that these positions could become more fragile if the decline continues.

On the institutional side, the situation is different. CME futures premiums are hovering near their lowest levels of the year, and the narrowing of the curve structure indicates that risk aversion is ongoing. Lunde states that this disconnect between the spot and institutional derivatives market has often appeared before negative price movements in the past. According to K33 data, the current structure has repeated itself seven times in the last five years, and in six of those periods, Bitcoin experienced an average decline of 16% in the following thirty days.

Additionally, there is also selling pressure on the Bitcoin ETF side. Over the past week, 20,150 BTC has exited from the products, and approximately 40,000 BTC has been withdrawn in the last thirty days. Notably, a single-day exit of 10,060 BTC that occurred on November 13 has been recorded as the fourth-largest outflow since the launch of U.S. ETFs. The sales from long-term investors, coupled with weakening tech stocks and the annual peak correlation situation, are exacerbating the issue.

K33 presents two scenarios for potential bottom levels. While stronger periods are expected in the long term with corporate adoption and a supportive monetary policy, the current decline is noted as one of the sharpest 43-day pullbacks since 2017. If historical similarities continue, it is reported that Bitcoin could find a bottom in the range of $84,000 to $86,000, and in the case of more intense selling pressure, the level of $74,433, which was the April low, could be retested. Lunde states that these levels are psychological areas for most investors.