Bitcoin Market Volatility Expected as Price Nears $90,000
Bitcoin's recovery rally is focusing on the $90,000 level, which is critical due to options market dynamics. Key points include:
- Market makers provide liquidity by hedging positions in spot and futures markets.
- Deribit options data indicates market makers are "short gamma" at the $90,000 strike, necessitating buying when prices rise and selling when they fall.
- This short gamma position could increase market volatility as it requires active trading to maintain neutrality.
- Market makers were previously long gamma at $90,000 and $100,000, leading to price consolidation.
- The upcoming quarterly settlement may enhance price fluctuations around the $90,000 mark.
- Post-expiration, BTC's dealer gamma profile will resemble that of the gold-backed PAXG token, indicating similar price support and resistance patterns.
