While the Bitcoin recovery rally (BTC) continues, $ 90,000 is now the key level where things could become interesting. The projection is mainly based on the current positioning of options market agents.
Market manufacturers, also called dealers or MMS, are responsible for providing liquidity to the order book. They occupy the opposite side of the investor professions and work to maintain a neutral exposure on the market by coverage on the Spot markets and ultimately. They make money on the difference between what they pay for an asset and how much they sell it, known as the bizarre propagation.
Data on drunk Bitcoin options followed by Amberdata show that market manufacturers are “short gamma” with a strike of $ 90,000. This means that when the price of Bitcoin approaches this level, market manufacturers will have to sell when the cash price will drop and buy when it increases to keep a neutral position on the market. These coverage activities could add to market volatility.
“Since the negative gamma will always have a significant impact on the market after regulation, the MMS coverage behavior can further promote price fluctuations,” the Blufin Academy and Chief Research and Blufin options told Coindesk Grufin Adern, Chief Author, Chief Research and Blofin, told Coindesk. “But the possibility of an upward price movement seems to be greater for the moment.”
Gamma represents the variation rate of the delta, which itself measures the sensitivity of the price of an option to changes in the price of the underlying assets. Holding a short gamma means holding a short position in the options, which can cause financial loss, especially during periods of high volatility. Thus, when market trucks are a short gamma, they must exchange the management of the market to maintain a neutral book on the market.
The reverse is the case when market manufacturers are long gamma. Towards the end of last year, market manufacturers were long gamma at $ 90,000 and $ 100,000, which led to consolidation between these levels.
The graph shows gamma levels at the prices of exhibitions through expirations. It is clear that the $ 90,000 strike will remain the one with the most negative delta following the quarterly regulations due this Friday.
In other words, the concessionary coverage behavior could add to the market oscillations at around $ 90,000.
According to Ardern, the gamma profile of the BTC concessionaire after Friday’s expiration will be similar to the PAXG token on golden back.
“After deleting the impact of options on the point of being set, PAXG has a gex distribution similar to BTC. The price obtains support after a significant drop in prices and meets resistance when it increases considerably, that is to say a wide range of fluctuations,” said Ardern.
