Bitcoin's price has fallen below a crucial support level, which could lead to a significant correction of 8-12%, according to CryptoQuant analysts. This key level, known as the on-chain realized price, is currently at $65,800. The analysts suggest that if bitcoin's price continues to trade below this level, it may decline to $60,000.

While the price drop has crossed the key support level, CryptoQuant analysts believe that the downside pressure may be limited. However, the market lacks bullish momentum, and traders are not increasing their bitcoin holdings. Additionally, demand from large holders, or "whales," remains weak. Stablecoin liquidity has also slowed down, growing at its slowest pace since November 2023.

The unwinding of basis trades is another factor contributing to bitcoin's price drop. Basis trades involve exploiting the price difference between the spot market and futures contracts. As these trades unwind, it can lead to a significant sell-off in the spot market, putting downward pressure on bitcoin's price.

According to Jag Kooner, Head of Derivatives at Bitfinex, the collapse in bitcoin futures open interest is due to the unwinding of the basis arbitrage trade. This has led to a pullout of spot bitcoin exchange-traded fund (ETF) investments, causing further downside pressure on bitcoin.

In conclusion, bitcoin's price drop below the key support level may lead to a significant correction. The lack of bullish momentum, weak demand from large holders, and slowing stablecoin liquidity all contribute to the bearish sentiment. As the market continues to evolve, it's essential to monitor these factors to understand the potential impact on bitcoin's price.