Bloomberg: Bitcoin Plunges Into Danger Zone as Options Factors Intensify Market Volatility

BlockBeats News, November 22, according to Bloomberg, bitcoin plunged, putting the market in a dangerous situation. Option-based selling further intensified volatility.

Bitcoin has fallen by about 25% so far this month. This decline was mainly triggered by spot selling, including outflows from major exchange-traded funds (ETFs), sales of long-dormant wallet assets, and a decrease in demand from momentum investors.

On the other hand, option trading positions have also amplified price fluctuations. When bitcoin falls below certain price levels, traders need to adjust their hedges to maintain neutral positions. This process, known as "Gamma exposure," further magnifies price volatility.

One key level is $85,000, which was breached on the 21st. There is concentrated demand for put options near this strike price, forcing market makers to hedge large exposures. In this situation, traders are typically in a "short Gamma" position and will sell more bitcoin to maintain balance, thereby accelerating the decline.