Bitcoin’s Recent Range Explained by Options Market Structure

Bitcoin spending much of December trading in a narrow range between $85k and $90k hasn’t necessarily been a sign of weakness or strong conviction in either direction.

One structural factor often overlooked is options market positioning. A large concentration of open interest around current price levels can create strong gamma effects. Dealers managing these positions are incentivized to hedge dynamically — buying into dips and selling into rallies — in order to remain neutral.

This hedging behavior can mechanically compress price action, reduce realized volatility, and keep spot price range-bound, even when broader macro assets move decisively.

With a significant portion of bitcoin options open interest approaching expiry, this gamma influence naturally decays. As those positions roll off, the mechanical pressure that constrained price action may weaken, allowing price to move more freely.

This is not a directional prediction, but an explanation of market structure dynamics that can temporarily suppress volatility.

Not financial advice. Educational discussion only.