Bitcoin (BTC) soars to all-time highs, igniting excitement among crypto investors. Recent price movements have pushed BTC past the $111,000 mark during Asian trading hours, with analysts predicting even stronger demand ahead. But hidden forces, like market maker hedging activities at key price levels, could influence the rally’s pace.
Industry experts suggest that the supply of Bitcoin in over-the-counter (OTC) markets may be shrinking, which could drive prices higher without reflecting in exchange volumes or derivatives trading. This shrinking OTC supply, combined with increasing corporate treasury Bitcoin purchases and rising sovereign interest, hints at a potentially explosive price surge.
According to Alexander S. Blume, CEO of Two Prime, corporate treasuries are actively buying Bitcoin OTC in large quantities, and there are rumors of increased demand from sovereign investors. Meanwhile, Ryan Lee, chief analyst at Bitget, forecasts Bitcoin could hit $180,000 by year’s end, bolstered by inflows into spot ETFs, reduced post-halving supply growth, and growing institutional adoption.
A significant macro catalyst is Moody’s recent downgrade of the U.S. credit rating to Aa1, prompting investors to view Bitcoin and Ethereum as safe hedges against fiat currency risks. Bitcoin’s resilience above $103,000 amid volatility underscores its emerging role as a strategic reserve asset.
However, the path to $115,000 might encounter resistance from the options market. Market makers and dealers, responsible for providing liquidity, tend to hedge their positions at certain price points. Data shows that at around $115,000 and above, dealers hold substantial positive gamma exposure, meaning they are long call options. As Bitcoin’s price rises, these dealers need to hedge by selling more underlying BTC, which can act as a contrarian force, tempering extreme volatility.
Jeff Anderson of STS Digital notes that if Bitcoin can break through this gamma pocket at $115K, the rally could accelerate significantly. The market’s positive gamma profile, driven by investors overwriting higher strike call options for yield, suggests a cautious approach from dealers ahead of a potential breakout.
In summary, while Bitcoin’s bullish momentum remains strong, market dynamics like OTC supply constraints, institutional buying, macroeconomic factors, and options market hedging activities will play crucial roles in shaping its near-term trajectory. Investors should stay attentive to these underlying forces as BTC aims for new highs.
