Bitcoin has long frustrated both bulls and bears, moving between $85,000 and $90,000 without a clear breakout. The culprit is not a lack of buying interest or macroeconomic headwinds — but the options markets.
Derivatives data shows that dealer gamma exposure is currently dampening spot price fluctuations through mechanical hedging actions. This structure has kept Bitcoin in a narrow range, but the forces holding the price in place will expire on December 26.
Gamma flip level
At the center of this dynamics is the term used by traders: the 'gamma flip' level, which is currently around $88,000.
Above this threshold, market makers with short gamma positions will have to sell during price rallies and buy on dips to remain delta neutral. This action reduces volatility and pulls the price back towards the center of the range.
However, if the price drops below the flip level, the mechanics will reverse. Selling pressure will intensify as market makers hedge their positions in the same direction as the price movement, increasing volatility instead of reducing it.
$90,000 still rejects as $85,000 holds.
$90,000 has repeatedly acted as a ceiling, and the reason lies in concentrated positions in buy options.
Market makers are significantly short on buy options at the $90,000 level. As the spot price approaches this level, they will need to sell Bitcoin to hedge their positions. This creates selling pressure that appears organic, even though it is actually forced selling due to derivatives hedging.
Every price rally to $90,000 triggers this hedging flow, explaining why breakout attempts have repeatedly failed.
Below $85,000 has served as a reliable support level with the opposite mechanism of the same phenomenon.
Heavy positions in sell options at this level mean that market makers will have to buy spot Bitcoin as the price falls towards this point. This forced buying absorbs selling pressure and prevents longer declines.
The result is a market that appears stable on the surface but is, in reality, held in an artificial balance due to opposing hedging flows.
Futures liquidations reinforce the range.
The range driven by options markets is not separate from other market factors. Coinglass's liquidation heatmap shows that leveraged futures positions have stacked at the same price levels, creating additional pull and reinforcing the $85K–$90K corridor.
Significant short liquidation levels have accumulated above $90,000. If the price breaks through this ceiling, forced position closures will trigger a buying wave. Conversely, long liquidation levels are well below $86,000, meaning the decline will accelerate if leveraged longs are forced out. Options market makers' hedging actions and futures liquidation mechanics are now aligned, doubling structural pressure and keeping Bitcoin trapped in the current range.
The expiration of options on December 26 is shaping up to be the largest in Bitcoin's history: approximately $23.8 billion in notional value is set to expire.
For comparison, annual expirations were about $6.1 billion in 2021, $11 billion in 2023, and $19.8 billion in 2024. The rapid growth reflects increasing participation of institutional investors in Bitcoin's derivatives markets.
According to analyst NoLimitGains, about 75% of the current gamma profile will disappear after this expiration. The mechanical forces holding the price at the $85K–$90K area will nearly vanish.
Dealer gamma dominates ETF investments.
Market makers' hedging activity is currently several times greater than the demand in spot markets. According to analysts, dealer gamma exposure is about $507 million, while daily ETF activity is only $38 million — a ratio of about 13:1.
This imbalance explains why Bitcoin has overlooked even bull-favorable catalysts. As long as the impact of derivatives is this significant, market makers' hedging mechanics weigh more than the narrative of institutional acceptance.
What happens next
Once the December 26 expiration is over, the mechanism pressuring the price will be removed. This does not guarantee a certain direction — Bitcoin's price could move more freely.
If the bulls can defend the $85,000 support level over the expiration, a breakthrough towards $100,000 is structurally possible. However, if the price falls below $85,000 under low gamma conditions, the decline could accelerate quickly.
Traders should prepare for heightened volatility in early 2026 as new positioning forms. The weeks-long range movement is likely just a temporary phenomenon caused by derivatives mechanics — not the general market sentiment.
