This Bitcoin Market Dynamic Commands Attention as Prices Surge Past $110K

Bitcoin (BTC) has surged past $110,000 as traders prepare for a significant $13 billion options expiry this Friday. With BTC trading at levels where dealers hold net negative gamma exposure around the $100,000 and $111,000 strike prices, heightened market volatility is anticipated. This negative gamma indicates that market makers have written more options than they have bought, necessitating their hedging activities. These activities can lead to greater price fluctuations as they buy when prices rise and sell when they drop, becoming more pronounced as the expiry approaches. Currently, dealer gamma is mostly negative between $105,000 and $111,000, which suggests potential trading intensification in that range. Analysts believe that the next substantial move in Bitcoin's price may stem less from fundamental factors and more from this mechanical flow associated with options hedging. Amidst this, Bitcoin has shown significant volatility leading to liquidations in leveraged futures amid cautious comments from the Federal Reserve. Despite the recent ups and downs, analysts remain optimistic about Bitcoin's long-term prospects with anticipated liquidity increases.

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