As bitcoin’s price continues to surge, there is a potential roadblock looming ahead as it approaches the $90,000 to $100,000 range. Market makers or dealers, responsible for providing liquidity in the order book, have taken significant positions in BTC options at these levels on Deribit exchange. This means that if prices reach these levels, market makers may trade against the market direction to maintain a neutral exposure, potentially keeping prices rangebound.
Options are derivative contracts that give the holder the right to buy or sell the underlying asset at a predetermined price in the future. Market makers use gamma exposure to determine how aggressively they need to trade the underlying asset to keep their overall exposure neutral. Currently, market makers have positive gamma exposure at the $90,000 strike options, which could impact price movements in that range.
Greg Magadini, Director of Derivatives at Amberdata, highlighted that traders have bought options up to the $90,000 level for November and December, but the $90,000 to $100,000 range has been sold to dealers. This suggests that if the market reaches these levels, prices may struggle unless sentiment becomes more bullish.
Bitcoin is currently trading just above $82,000, inching closer to the crucial $90,000 level. The influence of market makers and dealers at these price levels could play a significant role in determining the future price action of bitcoin.
It’s important for investors and traders to keep an eye on these dynamics in the options market as they can impact the overall price movement of bitcoin. Understanding the role of market makers and dealers in maintaining liquidity and managing risk is crucial for navigating the volatile cryptocurrency market.
As the cryptocurrency industry continues to evolve, staying informed about market trends, trading strategies, and key players in the market can help investors make well-informed decisions. The influence of market makers and dealers on bitcoin’s price at key levels like $90,000 and $100,000 underscores the complexity of the market dynamics and the need for a nuanced approach to trading and investing in cryptocurrencies.
