BlockBeats News, November 22nd, according to Bloomberg, Bitcoin plunged, putting the market in a dangerous position. The sell-off based on options trading further intensified the volatility.
Bitcoin has fallen by about 25% so far this month. This decline was mainly caused by spot selling, including outflows from large exchange-traded funds (ETFs), sales of long-dormant wallet assets, and a decrease in demand from momentum investors, among other factors.
On the other hand, option trading positions also magnified the price volatility. When Bitcoin falls below a specific price level, traders need to adjust their hedges to maintain a neutral position. This process, known as the “Gamma Squeeze,” will further amplify price swings.
One key level is $85,000, which was breached on the 21st. Put option demand near this strike price is concentrated, and market makers are forced to hedge against large exposures. In such cases, traders are usually in a “short Gamma” state and will sell more Bitcoin to maintain balance, thereby accelerating the decline.
