Bitcoin and ether face higher volatility as dealer hedging amplifies price moves

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Bitcoin & ether volatility

Highlights

Market makers for bitcoin and ether are in negative gamma territory, forcing dealers to hedge procyclically and increasing short-term volatility risks.
Greeks.Live data shows negative gamma for bitcoin between $58,000 and $72,000, with key concentrations near $68,000 and $70,000, indicating limited downside support until $57,700.
Negative gamma for ether also heightens liquidation risks in perpetual futures, potentially triggering sharp moves unless bitcoin breaks above $73,000 where gamma turns positive.

Options positioning drives current market swings

As reported by CoinDesk, citing Greeks.Live, market makers are sitting in negative gamma territory across the price zones where bitcoin and ether are currently trading, a setup that can force dealers to sell as prices fall and buy as prices rise. That hedging pattern tends to reinforce momentum rather than counter it, increasing the risk of sharper intraday moves.

Market makers, also known as dealers, typically take the other side of options trades and then hedge their exposure in spot or futures markets to stay neutral on direction. In a short-gamma environment, that routine risk management can become a source of instability because dealers must trade with the move instead of against it.

Adam, a macro researcher at options platform Greeks.Live, told CoinDesk that both bitcoin and ether have moved into deep negative gamma territory. He said that means dealers are net short options, largely because traders are bidding up downside puts or chasing breakout calls, leaving hedging flows tied to prevailing momentum.

Key price levels shape the risk outlook

Greeks.Live's bitcoin chart shows negative gamma across roughly $58,000 to $72,000, with larger concentrations near $68,000 and $70,000. At 12:37 UTC on Saturday, bitcoin is near $67,191, and the data suggests there is little positive gamma below the current price to cushion a drop until the area around the June low of $57,700.

The ether chart shows a similar pattern, with the token also trading inside a negative gamma zone. Adam said even a modest decline can trigger a broader chain reaction through liquidations in perpetual futures, where leveraged positions are forcibly closed when markets move the wrong way.

The effect also works on the upside, because dealers in negative gamma are likely to buy into a rising market and accelerate gains. That dynamic changes if bitcoin moves above about $73,000, where gamma turns positive and hedging activity could begin to absorb volatility instead of amplifying it; however, the picture can shift quickly as prices move and options contracts expire.

As highlighted earlier, Bitcoin liquidations surged to $656 million as the price dipped below $67,000 amid a broader sell-off.

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