Bitcoin's Rise Faces Potential Slowdown at $115K

Bitcoin (BTC) has recently achieved new all-time highs, fueling excitement among investors. However, a potential obstacle looms around the $115,000 mark, where market maker hedging activities could moderate the current bull run.

Strong Demand and Limited Supply

Alexander S. Blume, founder and CEO of Two Prime, suggests that the over-the-counter (OTC) supply of Bitcoin may be diminishing, contributing to the price surge. This scarcity isn't always reflected in exchange trading volumes or the derivatives market. Blume notes increasing demand from corporate treasuries and potential sovereign entities.

Bullish Projections

Ryan Lee, chief analyst at Bitget, anticipates that Bitcoin could rally to $180,000 by year's end. This forecast is supported by inflows into spot ETFs, reduced supply growth after the halving event, and greater institutional acceptance.

Lee also highlights Moody's downgrade of the U.S. sovereign credit rating as a potential catalyst, driving renewed interest in Bitcoin and Ethereum as hedges against fiat risk. Bitcoin's ability to maintain a price above $103,000 during periods of volatility indicates a shift towards crypto as a strategic reserve asset.

The $115K Barrier

Despite the bullish outlook, Jeff Anderson, head of Asia at STS Digital, points to potential hedging activities by options market makers/dealers near $115,000 and beyond that could slow the advance. These dealers, providing liquidity, manage their net-price exposure through hedging strategies.

Data from Deribit's BTC options market indicates that dealers hold significant "positive gamma" exposure at $115K and higher strike price levels. With positive gamma, dealers must sell more Bitcoin as the price increases to remain delta-neutral, creating a contrarian force.

Anderson highlights that investors overwriting (selling) higher strike call options contributes to the positive gamma. Clearing the "pocket of gamma" at $115K could pave the way for further upward momentum.

Key Takeaways

• Bitcoin's rally may face resistance around $115,000 due to market maker hedging.
• Strong demand from corporate treasuries and potential sovereign entities is driving prices.
• Analysts predict further gains, with some forecasting a $180,000 target by year-end.
• Positive gamma exposure in the options market creates a contrarian force, potentially limiting price volatility.