Is a Gamestop-style gamma squeeze fueling bitcoin’s rally?
Is bitcoin experiencing a Gamestop-style gamma squeeze? Fielding questions from increasingly anxious speculators as the currency roared toward all-time highs during Tuesday’s trading session, Galaxy Digital researchers posted their estimate as of midday. Citing Amberdata’s compilation of data from Deribit, a large bitcoin options exchange, Galaxy’s Head of Research estimated Deribit options dealers’ gamma exposure at $15 million per 1% increase in BTC price from $71,000 through $85,000. In other words, bitcoin’s price is benefitting from a gamma squeeze. Before contextualizing this effect relative to other factors, however, it is critical to understand this mechanism of action without jargon. for every 1% move up between $71k and $85k, dealers need to hedge $15m. if we move up from $71k to $85k, dealers need to net buy $252m to hedge. there are a number of ways for dealers to hedge if we move higher, but buying spot is probably the cheapest#bitcoin #gamma pic.twitter.com/...