"Bitcoin's volatility may increase ahead of the $13 billion options expiration."

Bitcoin (BTC) prices have recently gained strong momentum, surpassing the $110,000 level. However, there is an upcoming turning point in the markets: $13 billion worth of Bitcoin options will expire on Friday. Analysts caution that this event could create a critical volatility threshold in the markets.

The recent price surge is largely attributed to optimism surrounding U.S.-China trade relations. However, investors are now focusing on the $13 billion options expiration on Friday. Data from Amberdata and Deribit Metrics suggest that this expiration could create significant movement in the Bitcoin market. Notably, it has been observed that market makers have sold more options at the $100,000 and $111,000 levels. This indicates a situation referred to as “negative gamma,” which could lead to sharper price movements.

In negative gamma conditions, market makers attempt to balance their risks by buying as prices rise and selling as prices fall. This creates a feedback loop that increases volatility in the markets, and as the expiration of the options approaches, the impact is expected to strengthen. This situation becomes more evident, especially in “at-the-money” (ATM) contracts trading in the $110,000 to $111,000 range. According to Deribit data, it is noteworthy that gamma positions between $105,000 and $111,000 are negative. However, prices above the $114,000 level may create a different dynamic with the activation of positive gamma positions.

In conclusion, the short-term price direction of Bitcoin seems likely to be influenced by mechanical hedge movements in the options market. The $13 billion options expiration occurring on Friday could play a significant role in determining Bitcoin's next direction. It will be beneficial for investors to closely monitor these developments.