Bitcoin has long been putting both bullish and bearish investors in a bind; because the price has been stuck between 85,000 dollars and 90,000 dollars, a clear breakout has yet to occur. This situation is not due to a lack of buying interest or macroeconomic winds: The main culprit is the options market.
Derivative market data reveals that the mechanical hedge operations stemming from dealers' gamma positions are currently suppressing spot price volatility. This structure is keeping Bitcoin within a narrow band, but these forces that are holding prices in place are expected to cease on December 26.
Gamma Flip Level
At the center of this balance is the level that traders refer to as the 'gamma flip,' which is currently around $88,000.
If this threshold is surpassed, market makers in short gamma positions are forced to sell during rises to maintain delta-neutral positions and buy during declines. This reduces volatility and pulls the price back to the middle of the range.
When the flip level is breached, the balances reverse. Dealers increase selling pressure by hedging in the same direction as the price movement, amplifying volatility instead of suppressing it.
$90,000 Resistance Continues, $85,000 Support is Maintained
$90,000 level has repeatedly acted as a ceiling; the impact of intense call option positions is significant.
Dealers are short on a significant amount of call options at the $90,000 strike level. As the spot price approaches this level, they are forced to sell Bitcoin to hedge their risks. Although this may seem like a natural selling pressure, it actually stems from the forced sales of derivative hedge operations.
Every rally towards $90,000 triggers this hedge flow. The secret behind why breakout attempts constantly fail lies here.
On the downside, the $85,000 level provides strong support with an opposite mechanism.
Due to the high volume of put options at this strike point, as the price approaches this level, dealers are forced to buy spot Bitcoin. This mandatory buying absorbs the selling pressure and prevents a permanent breakout.
The emerging picture: This market, which sounds stable, is actually kept in an artificial balance by opposing hedging flows.
Futures Liquidations Strengthen the Range
This options-based narrow range does not work by itself. Data from the liquidation heatmap obtained from Coinglass shows that leveraged futures are clustered at the same price levels, thereby increasing the gravitational pull in the $85,000-$90,000 range.
Serious short liquidation levels have accumulated above the $90,000 level. If the price surpasses this ceiling, a buying wave may be triggered as short positions are forced to close. On the other hand, long liquidation levels are dense below $86,000; that is, if the price breaks, leveraged long positions may be liquidated, accelerating sales. The mechanics of liquidation in both the options dealer's hedge operations and futures are combined. This creates a structural pressure that doubles Bitcoin's current range confinement.
The option expiration on December 26 will be the largest seen in Bitcoin's history. Positions worth approximately $23.8 billion will expire.
To compare, annual expirations were approximately $6.1 billion in 2021, reached $11 billion in 2023, and will reach $19.8 billion in 2024. This rapid growth is indicative of increased institutional participation in Bitcoin derivative markets.
According to analyst NoLimitGains, approximately 75% of the current gamma profile will be removed from the market after this expiration. The mechanical forces that fix the price in the $85,000-$90,000 range will dissipate.
Dealer Gamma ETF Flows are Decisive
Currently, the volume of dealer hedge activity overwhelmingly eclipses demand in the spot market. According to data reported by analysts, dealers' gamma position is around $507 million; in contrast, daily activity in ETFs is only $38 million. This indicates a ratio of about 13 to 1.
This imbalance explains why Bitcoin overlooks apparent bullish catalysts. While this pressure in the derivative markets continues, the dealer hedge mathematics is much more effective than the narrative of institutional adoption.
What's Next
When the December 26 expiration occurs, this suppressive mechanism will end. This does not necessarily mean that the price will go in a specific direction; it only indicates that Bitcoin will enter a period where it can move freely.
If bulls can maintain the $85,000 support until expiration, a breakout to $100,000 could become structurally possible. However, if a breakout occurs below $85,000 in a low gamma environment, the decline may gain speed.
Traders should expect volatility to increase by the beginning of 2026; new positionings will seek their place in the market. The price movements in the range observed in recent weeks are likely a temporary process resulting from derivative mechanics. This can be explained more by technical balances than by the underlying stability of the market.
