Bitcoin has frustrated both bulls and bears for a while, hovering between $85,000 and $90,000 with no clear breakout in sight. The culprit isn’t a lack of buying interest or macroeconomic headwinds; it’s the options market.
Derivatives data show that dealers’ gamma radiation exposure currently suppresses spot price volatility through mechanical hedging flows. This structure has kept Bitcoin in a tight range, but the forces holding the price in place are set to expire on December 26.
The Gamma Flip level
Central to this dynamic is what traders call the “gamma flip” level, which is currently around $88,000.
Above this threshold, market makers with short gamma positions are forced to sell on rallies and buy dips to maintain delta neutrality. This behavior dampens volatility and pulls the price back to the middle of the range.
Below the flip level, the mechanics reverse. The selling pressure works in itself because dealers hedge in the same direction as price movements, amplifying rather than suppressing volatility.
$90,000 continues to decline while $85,000 continues to hold
The $90,000 level has repeatedly acted as a ceiling, and the reason lies in the concentrated positioning of call options.
Dealers are short a significant number of call options at the $90,000 strike. As the spot price approaches this level, they must sell Bitcoin to hedge their exposure. This creates what appears to be organic selling pressure, but is in fact a forced supply through derivative hedging.
Any rally towards $90,000 triggers this hedging flow, which explains why breakout attempts have repeatedly failed.
On the other hand, $85,000 has served as reliable support through the exact reverse mechanism.
Heavy put option positioning at this strike means dealers will have to buy spot Bitcoin if the price drops to that level. This forced demand absorbs the selling pressure and prevents persistent disruptions.
The result is a market that appears stable at first glance, but is actually kept in artificial equilibrium by opposing hedging flows.
Future clearance sales will strengthen the range
The options-based range does not operate in isolation. Data from Coinglass’ liquidation heatmap shows that leveraged futures positions have clustered around the same price levels, creating additional magnetic forces that strengthen the $85,000-$90,000 corridor.
Significant short liquidation levels have built up above $90,000. If the price were to break this ceiling, forced short covering would trigger a cascade of buy orders. Conversely, long liquidation levels are concentrated below $86,000, meaning the collapse would accelerate as leveraged long positions were exited. The mechanisms for both option dealer hedging and futures liquidation are now aligned, doubling down on the structural pressures that keep Bitcoin trapped in its current range.
Source: CoinglassOptions trap lies ahead
The December 26 options expiration looks set to be the largest in Bitcoin history, with a notional value of approximately $23.8 billion.
By comparison, annual expirations were approximately $6.1 billion in 2021, $11 billion in 2023, and $19.8 billion in 2024. The rapid growth reflects increasing institutional participation in the Bitcoin derivatives markets.
According to analyst NoLimitGains, approximately 75% of the current gamma profile will disappear after this expiration date. The mechanical forces that have pegged the price between $85,000 and $90,000 will essentially disappear.
Dealer Gamma dominates ETF flows
The volume of dealer hedging activity currently exceeds spot market demand. Data cited by analysts shows that dealer gamma exposure is about $507 million, compared to just $38 million in daily ETF activity – a ratio of about 13 to 1.
This imbalance explains why Bitcoin has seemingly ignored bullish catalysts. Until the derivatives overhang disappears, the math of dealer hedging is more important than the story of institutional adoption.
What comes next
Once the December 26 due date passes, the suppression mechanism will be over. This does not guarantee any specific direction – it simply means that Bitcoin will be free to move.
If the bulls successfully defend the $85,000 support until expiration, a breakout to the $100,000 level becomes structurally possible. Conversely, a break below $85,000 in a low-gamma environment could accelerate to the downside.
Traders can expect increased volatility in early 2026 as the new positioning takes hold. The price action of recent weeks is likely a temporary phenomenon, driven by derivatives mechanisms, and not a reflection of the market’s underlying belief.
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