Bitcoin Eyes $90K as Options Market Makers Brace for Volatility
Bitcoin’s (BTC) continued rally has brought it close to the $90,000 mark, a level that could introduce heightened volatility due to options market dynamics.
The key reason? Market makers’ positioning in the options market.
Market Makers and the $90K Threshold
Market makers (MMs) are entities that provide liquidity by taking the opposite side of trades. To stay market-neutral, they hedge their exposure in spot and futures markets, adjusting their positions as prices shift.
Data from Deribit, tracked by Amberdata, indicates that market makers are “short gamma” at the $90,000 strike price. This means that as BTC approaches $90K, MMs will need to buy when prices rise and sell when prices drop—a behavior that could amplify price swings.
“Since negative gamma will continue to impact the market post-settlement, the hedging behavior of market makers could further fuel price fluctuations,” said Griffin Ardern, head of BloFin Research and Options. “However, for now, the probability of an upward move seems stronger.”
Understanding Gamma and Its Market Impact
Gamma measures how an option’s delta changes relative to BTC’s price movement. When market makers are short gamma, they must trade in the direction of price movement, reinforcing volatility.
When they are long gamma, they act against price swings, helping stabilize the market. Late last year, MMs were long gamma at $90K and $100K, which contributed to price consolidation within that range.
A look at current gamma levels suggests that after Friday’s quarterly options settlement, $90,000 will remain the most volatile strike price.
Post-Settlement Market Outlook
Following Friday’s expiration, Ardern suggests BTC’s dealer gamma profile will resemble that of PAXG, the gold-backed token.
“Once expiring options are out of the equation, BTC’s gamma exposure (GEX) distribution will mirror PAXG, meaning price drops could find support, while significant rallies may face resistance,” Ardern explained.
In simpler terms: Bitcoin may enter a period of choppy price action, with volatility at key resistance and support levels.
For now, traders are closely watching $90K—a breakout above could signal further bullish momentum, while a rejection might trigger a sharp pullback.
