Bitcoin has frustrated both bulls and bears for a while. The Bitcoin price constantly oscillates between $85,000 and $90,000 without a clear breakout. The problem is not a lack of buying interest or macroeconomic headwinds, but rather the options market.
Derivatives data show that traders' gamma exposure is currently suppressing the volatility of the spot market through automatic hedging. This keeps the Bitcoin price in a tight range, but the forces holding the price back will cease on December 26.
The Gamma Flip level
The key level here is what traders call the 'gamma flip'. This is currently around $88,000.
Above this threshold, market makers must sell Bitcoin with short gamma positions as the price rises and buy as the price falls to cover their risk. This behavior suppresses volatility and pulls the price back towards the middle of the range.
If the price falls below the flip level, the opposite happens. Selling pressure automatically increases as dealers move in the same direction as the price. This actually strengthens volatility.
$90,000 continues to reject while $85,000 holds
The $90,000 level acts repeatedly as a ceiling. This is due to many call options being concentrated there.
Dealers are short on a large number of call options with a strike price of $90,000. When the spot price approaches this threshold, they must sell Bitcoin to hedge themselves. This creates seemingly natural selling pressure, while it actually comes from forced selling due to hedging.
Any rise towards $90,000 triggers these hedge sales, explaining why breakout attempts repeatedly fail.
Downwards, $85,000 acts as strong support due to exactly the opposite mechanism.
There are many puts at the $85,000 level, causing dealers to buy Bitcoin when the price approaches that level. This mandatory buying pressure mitigates the selling pressure and prevents further declines.
As a result, the market appears stable, but in reality, artificial balance from opposing hedge movements keeps the price in check.
Futures liquidations strengthen the range
This options-driven range is not in isolation. Liquidation heatmap data from Coinglass shows that futures positions with leverage are accumulating around the same levels. This creates an additional magnetic effect that reinforces the $85K-$90K area.
Above $90,000, large short liquidation levels can be seen. If the price breaks above, it triggers a flood of buy orders due to forced short covering. Conversely, long liquidation levels are primarily below $86,000. A decline thus creates additional selling pressure as longs are liquidated. Both options hedging and futures liquidations are now reinforcing each other, causing the Bitcoin price to be stuck in this range.
The options expiry on December 26 is likely to be the largest in Bitcoin history, with about $23.8 billion in contract value expiring.
In comparison, annual expiries were about $6.1 billion in 2021, $11 billion in 2023, and $19.8 billion in 2024. The rapid growth shows that institutional participation in the Bitcoin derivatives market is significantly increasing.
According to analyst NoLimitGains, about 75% of the current gamma profile will disappear after this expiry. The mechanical forces that kept the price between $85K-$90K will then virtually disappear.
Dealer gamma dominates ETF flows
The scale of dealers' hedge activities now dominates demand in the spot market. Analysts mention a gamma exposure of about $507 million against only $38 million in daily ETF activity — a ratio of 13 to 1.
This skewed ratio explains why Bitcoin ignores positive developments. As long as derivatives dominance persists, the calculations of hedging are more important than the story of institutional adoption.
What comes next
After the expiry of December 26 passes, the suppression of the price will be lifted. This says nothing about the direction but means that Bitcoin can move more freely.
If bulls succeed in holding the $85,000 support during expiry, a breakthrough towards $100,000 is structurally possible. But if the price drops below $85,000 in a low gamma situation, the decline could actually accelerate.
Traders need to account for more volatility heading into early 2026, as market participants take new positions. The price in the tight range of the past weeks is likely temporary and primarily a result of derivatives mechanisms, not of conviction in the market.
