Recently, Bitcoin has been showing sideways movement, oscillating in a range from $85,000 to $90,000. The lack of a pronounced breakthrough is not related to a deficit in buying interest or macroeconomic factors.
The main reason lies in the structure of the derivatives market. Data on options indicate that dealer positions in the 'gamma' metric mechanically suppress the volatility of the spot price. These forces keep the asset within tight bounds, but their effect expires on December 26.
The level of 'gamma flip' and market dynamics
The current market dynamics are based on the so-called 'gamma flip' level, which is currently around $88,000. When the asset price is above this threshold, market makers with short gamma positions are forced to sell Bitcoin during price increases and buy it back during declines.
Such behavior of market participants effectively smooths out price fluctuations. Consequently, the price continuously returns to the middle of the established range. However, below the critical mark, the mechanics of the process change to the opposite. In this case, dealer hedging begins to amplify the price movement in the direction of the trend, significantly increasing volatility.
Reasons for the stability of the levels $85,000 and $90,000
The mark of $90,000 has repeatedly served as a local maximum. This is due to the high concentration of call options at this strike. As the price approaches $90,000, dealers are obliged to sell Bitcoin to maintain the delta neutrality of their portfolios. Thus, an excess supply is formed in the market, caused by the technical necessity of hedging positions.
At the lower boundary of the range, the level of $85,000 serves as reliable support due to the mirror mechanism. The presence of large positions in put options means that dealers begin actively buying Bitcoin as the price approaches this mark. This forced demand absorbs the pressure from sellers. As a result, the market remains in a state of artificial equilibrium, supported by opposing hedging flows.
The impact of liquidations on the futures market
The range formed by options is also supported by the situation in the perpetual futures market. Heat maps of liquidations show a concentration of leverage near the corridor boundaries of $85,000–$90,000.
Above the $90,000 level, a significant volume of short positions has accumulated. If this resistance is overcome, forced short covering will trigger a cascade of market buy orders. Conversely, below $86,000, there are levels of liquidation for long positions. This means that a break below the lower boundary could lead to accelerated decline. Currently, the mechanisms of options hedging and futures liquidations are synchronized, creating dual pressure on the quotes.
The upcoming expiration of contracts on December 26 will be the largest event in the history of the Bitcoin market. The nominal value of the expiring options is approximately $23.8 billion. For comparison, in 2021, the annual expiration was only $6.1 billion, while in 2024 it will be $19.8 billion. Such rapid growth confirms the increasing share of institutional participants in the segment of cryptocurrency derivatives.
According to expert estimates, about 75% of the current gamma profile will disappear after December 26. The mechanical forces that have kept Bitcoin within the current boundaries for the past weeks will cease to function. This will open the way for free price movement, unbounded by the technical factors of market makers.
Dealer dominance over ETF inflows
The scale of hedging activity by dealers significantly exceeds the demand in the spot market at this moment. Analytical data shows that the gamma exposure of dealers is around $507 million. At the same time, the daily net inflow of capital into spot ETFs averages only $38 million.
The ratio of these indicators is 13 to 1. This imbalance explains why Bitcoin ignores positive fundamental news. As long as the pressure from the derivatives market remains, mathematical hedging models will prevail over long-term institutional adoption strategies.
Further market prospects
After the expiration date, the mechanism of artificial restraint will be liquidated. This does not guarantee an immediate rise or fall; however, it returns natural mobility to the market. If buyers manage to hold the level of $85,000 until the options settlement is completed, movement towards the $100,000 mark will become structurally possible.
Investors should prepare for a substantial increase in volatility at the beginning of 2026. The current period of stagnation is a temporary phenomenon caused by the technical features of derivative financial instruments. After the positions of market participants are updated, Bitcoin will continue to move in accordance with market expectations and fundamental indicators.
