Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin’s immediate upside appears limited despite a recent bounce, as the cryptocurrency market navigates the aftermath of a historic “Black Friday” crash that saw roughly $20 billion in liquidations. Implied volatility has decreased, indicating a reduction in panic following the sharp price drop. Market makers, positioned “long gamma,” are influencing price stability, with analysts suggesting a potential short-term dip before a long-term rebound.
Market Dynamics Post-Crash
Bitcoin is currently trading around $113,500, marking a 1.5% decline over the past 24 hours, after experiencing its worst cascading set of liquidations in crypto history last week. The sell-off, dubbed “Black Friday,” was triggered by President Donald Trump’s announcement of a 100% tariff on all Chinese products, according to previous reports from Decrypt.
Hendrik Ghys, founder of futures and options exchange Thalex Global, noted a significant increase in put options expiring on October 31, reflecting heightened bearish activity. He also observed that implied volatility, a key measure of expected price swings, has repriced downwards to the low 40s for the short term and approximately 45% for longer horizons.
Market Maker Positioning and Hedging
Ghys highlighted that market makers, who held “long gamma” positions prior to the crash, continue to do so. This positioning necessitates that they sell during market rallies and buy during dips to effectively hedge their exposures and offset potential losses.
This dynamic tends to suppress upward price movements and contribute to market stabilization. Ghys maintains a cautiously optimistic view, anticipating that market makers will gradually reduce or close their positions at improved prices as volatility subsides, thereby helping Bitcoin to maintain its current levels.
Analyst Outlook: Short-Term Caution, Long-Term Bullishness
Ryan Lee, chief analyst at universal exchange Bitget, suggested that while short-term volatility might persist, potentially pushing Bitcoin towards the $100,000 support level and Ethereum to $3,600, this could be a healthy market correction. Such a correction is seen as a mechanism to clear out “weak hands” and prepare the market for renewed accumulation.
Despite these short-term uncertainties, Lee remains bullish on the long-term prospects for both Bitcoin and Ethereum. He forecasts a potential rebound for Bitcoin to $130,000 and for Ethereum to $4,800, citing anticipated institutional inflows through exchange-traded funds and digital asset treasuries as key drivers.
