Bitcoin News Today: Bitcoin's Gamma Spiral Deepens: Market Makers Brace for $80K Turnaround

Bitcoin's recent slump has intensified bearish sentiment in the cryptocurrency market, with the odds of the year-end price falling below $90,000 rising to 50% according to Derive.xyz. The world's largest cryptocurrency has lost more than 25% of its value this month, hitting a seven-month low of $80,553 on November 21. This sharp decline has triggered a cascade of hedging activity among market makers, exacerbating volatility as Bitcoin breaches key support levels tied to options expirations.

The sell-off has been fueled by a combination of factors, including a less dovish stance from Federal Reserve officials, which has dimmed expectations for rate cuts and pressured risk assets. Bitcoin's volatility skew has also deteriorated, with short-term options skewness expanding to -10.6% and long-term skewness dropping to -1.9%, indicating heightened demand for downside protection. Market participants are now hedging against further declines, with over 13,800 put options concentrated at the $85,000 strike price.

The mechanics of options trading have amplified Bitcoin's downward momentum. As the price fell below $85,000, market makers were forced to sell more Bitcoin to maintain hedging neutrality. This dynamic, known as gamma exposure, can create a self-reinforcing cycle of selling. The next critical threshold at $80,000 could reverse this dynamic, shifting dealers to a "long gamma" position where further declines would require them to buy Bitcoin to balance their exposure.

Broader market jitters have also contributed to the turmoil. The S&P 500's recent volatility and concerns over the sustainability of the year's stock rally have spooked investors, while Bitcoin's 30% drop since its October peak has underscored its sensitivity to macroeconomic shifts. Deribit data shows that traders are heavily positioned for continued declines, with significant put options outstanding at both $85,000 and $80,000 strike levels.

The Trump-era crypto boom, once a tailwind for digital assets, has also soured. A Trump-branded memecoin has lost a quarter of its value since August, while Eric Trump's Bitcoin mining venture has shed half its peak value. These developments highlight the fragility of crypto's institutional adoption, with some investors now turning to Bitcoin-native yield strategies as passive accumulation proves insufficient.