Both Bitcoin and Ether are trading in price zones where market makers’ hedging strategies could intensify volatility and trigger larger price movements.
Market makers are firms that take the opposite side of trades when investors speculate on Bitcoin (BTC) and Ether (ETH) price movements. Their routine hedging activities may now be contributing to sharper fluctuations in both cryptocurrencies.
Options are financial contracts that allow traders to bet on whether an asset will rise or fall. When investors purchase or sell these contracts, market makers typically take the opposing position, ensuring sufficient liquidity and allowing trades to be executed smoothly.
Also known as dealers, market makers generally do not speculate on market direction. Instead, they earn revenue from the spread between buying and selling prices while attempting to remain neutral. However, price fluctuations can expose them to directional risk. To offset that exposure, they buy or sell the underlying cryptocurrencies or related futures contracts. This process, known as hedging, helps maintain a market-neutral position.
Depending on their positioning, these hedging transactions can either reduce volatility or amplify price swings. Current conditions suggest the latter. The key indicator is gamma exposure (GEX), which measures how dealers’ option-related exposure changes as asset prices move. Greeks.Live data shows negative gamma exposure across Bitcoin’s current trading range.
Under these conditions, market makers may sell Bitcoin or futures contracts when prices decline and purchase them when prices rise to rebalance their positions. Such activity can reinforce existing market momentum, potentially accelerating both upward and downward movements.
“Both Bitcoin and Ether have slipped into deep negative gamma territory,” Adam, a macro researcher at options platform Greeks.Live, told CoinDesk. He noted that deep negative GEX indicates dealers are net short options, largely reflecting increased demand for downside puts and breakout calls. In this environment, dealers must trade in the direction of the prevailing market momentum to maintain their hedges.
Puts allow traders to position for falling prices, while calls provide exposure to potential gains.
Greeks.Live’s Bitcoin GEX chart highlights this situation. Each bar represents market makers’ gamma exposure at a specific price level. At 12:37 UTC on Saturday, with Bitcoin trading around $67,191, the chart showed negative gamma exposure between approximately $58,000 and $72,000. The largest concentrations appeared near $68,000 and $70,000. No positive gamma exposure was visible below the current price, suggesting limited support against further declines until the June low near $57,700.
The updated chart also shows a smaller negative gamma bar around $67,000, while the largest concentrations have shifted toward the $68,000 and $70,000 price levels.
Ether displays a comparable setup, with its market price also sitting within the negative gamma zone.
This positioning could create additional pressure across derivatives markets. Adam warned that even a modest Bitcoin decline could trigger cascading liquidations in perpetual futures markets. These contracts have no expiration date, while liquidations occur when leveraged positions funded with borrowed money are forcibly closed after adverse price movements.
The impact of negative gamma is not limited to downward movements. If Bitcoin and Ether begin climbing, market makers may need to purchase additional coins or futures contracts, potentially accelerating the recovery.
The situation could change if prices move above $73,000, where the chart indicates gamma exposure turns positive. In a positive gamma environment, dealers typically hedge against market movements, which can help absorb buying or selling pressure and reduce volatility.
Until Bitcoin and Ether reclaim their respective gamma-flip levels, where dealer positioning transitions into positive gamma, traders may face thinner order books, sharper intraday price swings and momentum-driven trading conditions.
Gamma exposure can change rapidly as prices fluctuate and options contracts expire. As a result, the current positioning of market makers and its influence on Bitcoin and Ether volatility may shift quickly.
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