coindesk.com
That force is market makers, the firms that take the other side when traders place bets on where bitcoin BTC$66,834.89 and ether ETH$1,891.77 are headed. Their routine hedging is now set to make price swings bigger.
Here’s the idea. Options are contracts that let traders bet on a coin’s price rising or falling. When a trader buys or sells an option, a market maker usually takes the other side of the trade. That way there is nearly always someone to trade with, which keeps the market running smoothly.
Market makers, also called dealers, are not in it to predict prices. They make money from the small gap between the prices at which they buy and sell, and they stay out of the bet on direction. Price moves leave them exposed to direction anyway, so they buy or sell coins, or futures tied to those coins, to cancel it out. That brings them back to market-neutral, meaning they have no bet on direction. This is called hedging.
That hedging can either calm the market or make its swings bigger, and right now it is doing the latter. The reason is how market makers are positioned, which is measured by gamma exposure, or GEX. According to Greeks.Live, GEX is negative, or short, across the price range where bitcoin is currently trading.
So they are likely to sell coins or futures as prices fall, to get their books back to neutral. As prices rise, they are likely to buy coins or futures for the same reason. Either way, their trading could exaggerate the move.
“Both Bitcoin and Ether have slipped into deep negative gamma territory,” Adam, a macro researcher at options platform Greeks.Live, told CoinDesk. “Deep negative GEX means dealers are net short options—largely driven by traders bidding up downside puts or chasing breakout calls. To stay hedged in a short-gamma regime, dealers must trade with the prevailing momentum, not against it.”
Puts are bets on a fall. Calls are bets on a rise.
Greeks.Live’s GEX chart for bitcoin shows what that looks like. Each bar shows market makers’ GEX at a price level. At 12:37 UTC on Saturday, with bitcoin near $67,191, the bars are red from about $58,000 to $72,000. The biggest ones sit near $68,000 and $70,000. There is no green below the current price, so nothing softens a drop until the area around the June low of $57,700.
