Bitcoin Nears $90K as Options Market Activity Signals Potential Volatility
Bitcoin (BTC) is closing in on $90,000, a level that could trigger increased market turbulence due to options market positioning and upcoming contract expirations.
Options Market Makers Hold the Key to Price Swings
Market makers (MMs) play a crucial role in providing liquidity and maintaining market balance by hedging their positions in spot and futures markets. However, data from Deribit via Amberdata suggests that at the $90K strike price, MMs are currently “short gamma.”
This positioning means that as Bitcoin’s price fluctuates near $90,000, market makers may be forced to buy as BTC rises and sell as it falls, creating potentially sharp and unpredictable price movements.
“With negative gamma exposure lingering after Friday’s options expiration, the market may experience further price swings,” said Griffin Ardern, head of BloFin Research and Options. “At the moment, the probability of an upward move appears stronger.”
How the Quarterly Options Expiry Could Impact BTC’s Price
The quarterly options settlement on Friday is expected to be a critical moment for Bitcoin. Historically, when market makers are long gamma, they stabilize price fluctuations by counteracting volatility. However, with short gamma exposure, their hedging activities could instead fuel rapid ups and downs in BTC’s price.
What to Expect Post-Expiration?
After the settlement, BTC’s price behavior could mirror that of gold-backed assets like PAXG, where dips find support but strong rallies encounter resistance, according to Ardern.
Key Insights for Traders
- $90K is a key inflection point, with price action likely influenced by options market dynamics.
- Market makers’ short gamma exposure may heighten volatility, leading to sharp price swings.
- Post-expiration trading could become more unpredictable, similar to other assets with structured yet volatile price patterns.
As the March 29 options expiration nears, all eyes are on Bitcoin’s reaction at $90K, which could determine its next major move in the market.
