Bitcoin's $100K Path: Gamma Squeeze, Options Dynamics, and Institutional Reentry

Bitcoin's journey toward $100,000 in early 2026 is not just a function of macroeconomic tailwinds or speculative fervor-it's a collision of structural forces in the derivatives market and a renewed institutional appetite for crypto. The interplay of gamma exposure, options-driven mechanics, and ETF inflows is creating a unique setup where price momentum could be amplified by self-reinforcing dynamics. Let's unpack how these elements align to create a high-probability scenario for a breakout.

The Gamma Reset: From Squeeze to Squeeze

In Q4 2025, Bitcoin's 36% drop from $126,000 to below $81,000 was exacerbated by a "gamma squeeze in reverse." Heavy put open interest around $80,000–$85,000 forced dealers to sell spot Bitcoin to hedge their positions, accelerating the decline. By year-end, however, the market underwent a dramatic reset: open interest fell by over 45%, clearing structural hedging constraints and creating a "clean slate" for fresh positioning.

Now, dealer gamma has flipped short between $95,000–$104,000, meaning any price strength in this range is reinforced by dealer buying to maintain delta neutrality. Conversely, negative gamma exposure above $100,000 suggests a potential short squeeze if Bitcoin breaks through this level, as dealers would be compelled to aggressively buy to cover short positions. This dynamic mirrors the 2021 gamma squeeze, where concentrated options activity amplified price moves.

The December 26, 2025, options expiry marked a critical inflection point. With $23.8 billion in notional value rolling off, 75% of the gamma exposure that had mechanically pinned Bitcoin between $85,000–$90,000 was removed. This structural reset has allowed the market to breathe, but it also means that fresh positioning-particularly around the $95,000–$100,000 range-could now act as a catalyst for a rapid move higher.

Institutional Reentry: ETFs as a Supply-Demand Imbalance

The institutional reentry into Bitcoin in early 2026 has been nothing short of seismic. U.S. spot Bitcoin ETFs absorbed $1.2 billion in inflows over the first two trading days of the year, with BlackRock's IBIT and Fidelity's FBTC leading the charge. This surge coincided with Bitcoin's rebound to $94,745, a level not seen since the November 2025 drawdown.

Analysts argue these inflows are not speculative but structural. For example, MicroStrategy and Strive's continued accumulation of Bitcoin treasuries signal a shift in corporate risk management strategies. Meanwhile, the filing of new ETFs by Morgan Stanley underscores the growing legitimacy of Bitcoin as a strategic asset class.

The implications are clear: institutional demand is tightening Bitcoin's supply curve. With ETFs acting as a "demand floor," the asset's price is less susceptible to short-term volatility. This dynamic is further reinforced by macroeconomic tailwinds, including a weaker U.S. dollar and a steepening yield curve, which favor assets like Bitcoin.

The $100K Threshold: A Gamma-Driven Catalyst

Bitcoin's current price around $94,000 is a psychological and technical inflection point. A break above $95,000 would not only test the Short-Term Holder Cost Basis at $99,100 but also trigger a cascade of dealer activity. Call options at $90,000 have already compelled dealers to sell rallies, but the absence of concentrated short gamma above $100,000 means dealers are now net buyers in this range.

This creates a self-reinforcing loop: institutional buying via ETFs + dealer gamma-driven buying = a supply-demand imbalance that could push Bitcoin toward $100,000. The surge in $100K call options on Deribit-particularly for January 30 expiries- further validates this thesis, as traders are pricing in a high probability of a breakout.

Risks and Caveats

While the setup is bullish, risks remain. A failure to reclaim $95,000 could reignite the put-heavy positioning that caused the Q4 2025 crash. Additionally, macroeconomic headwinds-such as a Fed pivot or a global liquidity crunch-could disrupt the current momentum. However, the structural reset in options open interest and the normalization of funding rates suggest the market is in a healthier state than in previous cycles.

Conclusion

Bitcoin's path to $100,000 is no longer a distant dream-it's a plausible outcome driven by a confluence of options-driven mechanics and institutional reentry. The gamma reset has removed the mechanical constraints that previously pinned the price, while ETF inflows are creating a supply-demand imbalance that favors upside. For investors, the key is to monitor the $95,000–$100,000 range closely: a breakout here could trigger a gamma squeeze and institutional buying that propels Bitcoin into six figures.