Bitcoin Price’s Next Move Up Will Be Extremely Explosive: Galaxy
October 23 2023 - 1:00PM
NEWSBTC
The Bitcoin market dynamics have recently taken an interesting
turn, suggests Alex Thorn, Head of Firmwide Research at Galaxy.
According to his recent thread on X, the options market makers in
BTC are currently operating in a position that could significantly
amplify any upward movement in its price. “Options market makers in
Bitcoin are increasingly short gamma as BTC spot price moves up.
[…] This should amplify the explosiveness of any short-term upward
move in the near term,” Thorn notes. This implies that as the spot
price of Bitcoin rises, these market makers have to buy back more
of the cryptocurrency to maintain their positions, a phenomenon
that could potentially amplify price surges. The Greatest Show On
Earth: Bitcoin Moreover, he highlighted that data from Amber
indicates that dealers are increasingly moving into a short gamma
position, especially when the BTC price is above $28.5k. In more
explicit terms, Thorn explains, “At $32.5k, market makers need to
buy $20 million of delta for every subsequent 1% move higher.” Such
positioning suggests that market makers might have to make
substantial purchases of Bitcoin as the spot price continues to
ascend. Related Reading: Bitcoin Inches Away From Hitting $31,000 –
How High Can BTC Go This Week? However, it’s not just upward
movements that are impacted. Thorn sheds light on the flip side of
the coin as well. “Dealers are long gamma in the $26,750-28,250
range. When you’re long gamma & spot declines, you also have to
buy back spot to stay delta neutral,” he comments. This means that
any minor downward adjustment in price might find resistance as
options dealers make necessary purchases to realign their
positions. For bullish investors, these dynamics present an
attractive landscape. Thorn elucidates, “This is a great setup for
bulls because if spot moves moderately higher, short gamma covering
could make it rip much higher pretty quickly, but if it moves
lower, long gamma covering could provide some support and limit
near-term downside.” Highlighting potential catalysts that might
set the Bitcoin spot price in motion, Thorn pointed to the growing
anticipation surrounding Bitcoin ETF approvals. Most recently,
renowned personalities and institutions such as Cathie Wood, Paul
Grewal, JP Morgan, and several analysts from Bloomberg Intelligence
have expressed positive sentiments on the odds for approval.
Related Reading: Coinbase Bullish: Bitcoin ETF Approval Expected
After SEC’s Defeat Eric Balchunas and James Seyffart of Bloomberg
predict that the odds of a spot Bitcoin ETF are 75% by the end of
this year and 95% by the end of 2024. Additionally, Thorn mentions
the recent surge in Bitcoin’s price above $31,000, suggesting it
surpassed last month’s highs following the fake news of an ETF
approval. Beyond market sentiments and speculations, fundamental
supply, and liquidity dynamics also play a role. Thorn mentions,
“Bitcoin’s currently constrained supply and liquidity could also
serve to amplify upward moves.” Notably, exchange balances of
Bitcoin have plummeted to levels not seen since 2018.
Simultaneously, smaller entities are accumulating Bitcoin, while
larger holders, often termed “whales,” appear to be reducing their
positions. He underscores the strength of the Bitcoin community
with a note on hodlers: “70% of supply has not transacted in 1+
years, 30% in 5+ years… ATHs both.” With all these dynamics at
play, Thorn aptly sums up the current state of the Bitcoin market:
“The next several months will be very interesting — Bitcoin is the
greatest show on earth.” At press time, BTC traded at $30,676.
Featured image from LinkedIn, chart from TradingView.com
Gala (COIN:GALAUSD)
Historical Stock Chart
From May 2024 to Jun 2024
Gala (COIN:GALAUSD)
Historical Stock Chart
From Jun 2023 to Jun 2024