As Bitcoin Approaches 90 Thousand Dollars, Experts Warn About Volatility: Here’s Why! - Coin Bulletin

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As the Bitcoin price approaches $90,000, an increase in volatility is expected due to the hedging (protection) strategies of options market makers.

As Bitcoin's (BTC) recovery process continues, the $90,000 level stands out as an important turning point. The volatility at this level is largely based on the positioning of options market makers.

Option market makers aim to balance their risks in the spot and futures markets by positioning themselves on the opposite side of investors' trades, maintaining a market-neutral position. In this way, they profit from the differences in trading spreads.

(# Volatility around 90,000 dollars may increase

According to Amberdata's Deribit Bitcoin options data, it appears that option market makers are holding a "short gamma" position at the $90,000 level. This means that as the Bitcoin price approaches this level, market makers will be forced to sell when the spot price drops and buy when it rises. Such hedging )protection### moves can increase volatility in the market.

Griffin Ardern, the chief writer and head of research at the BloFin Academy, stated to CoinDesk, "The negative gamma effect will continue to significantly impact the market even after delivery. The hedging behaviors of market makers may increase price fluctuations," he said. However, for now, it is indicated that the likelihood of an upward price movement is higher.

Gamma is a measure of the sensitivity of an option's price to changes in the price of the underlying asset. A "short gamma" position can lead market makers to face financial losses during periods of volatility. For this reason, market makers must make trades to adapt to movements in the market.

Ardern states that the future gamma profile of BTC will resemble that of the gold-backed PAXG token. "After the effects of the options have dissipated, the GEX distribution of PAXG and BTC will have a similar structure. Prices find support after a significant drop and face resistance when they experience a serious increase," he said.

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