Bitcoin

BTC $108,746.42

Bitcoin (BTC) and XRP (XRP) are trading sideways, likely influenced by hidden forces that maintain their prices at key levels.

These “price magnets” may increase volatility in the Ether (ETH) market.

Market makers, tasked with creating liquidity in exchanges’ order books, trade opposite to investors. They profit from the bid-ask spread and aim for price-neutral exposure. Their strategies in futures and spot markets can increase or decrease market volatility.

For BTC, options market makers are currently “long gamma” at $108,000 and $110,000, based on Deribit options activity observed by Amberdata. This means they hold long options (calls and puts) that benefit from potential volatility.

Consequently, market makers trade against market movements – selling high and buying low – to keep BTC within the $108,000-$110,000 range. CoinDesk data indicates that BTC has primarily operated within this range throughout the month.

A similar situation is evident in XRP’s market, where a substantial positive market maker gamma has been amassed around the $2.30 strike price. This leads market makers to buy low and sell high, thus limiting volatility.

Ether Prone to Volatility

Ethereum’s ether, the second-largest cryptocurrency by market cap, peaked at $2,647 earlier today, a level not seen since June 16.

This surge has placed ether in a “negative market maker gamma” zone between $2,650 and $3,500. When market makers are in negative gamma, they tend to trade in line with market movements, potentially intensifying bullish or bearish trends.

In essence, their hedging actions could amplify ether’s bullish momentum, increasing volatility, assuming all else remains constant.