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Analysis: The option dynamics behind the break below the $70,000 support level at Bitcoin are reversing, and the market may be poised for a rebound.
Svmuu News: 10x Research reported that the options market dynamics that drove Bitcoin below the $70,000 support level are shifting and may even begin to fuel an uptrend. After BTC fell below $70,000, the negative gamma effect in the options market amplified the decline.At the time, market makers shorting gamma were forced to sell during the decline, causing the market to evolve from a normal pullback into a chain of liquidations, with Bitcoins dropping to a low of $65,705. Today, this mechanism has not disappeared but has shifted to a new critical level. Currently, the largest negative gamma position in the Bitcoins options market is concentrated near the current spot price, with a value of approximately $1.8 billion. If price volatility occurs, market makers’ hedging activities could once again amplify market movements.Driven by improved market sentiment indicators, the potential for an Iran-related agreement to reduce inflation risk premiums, and market expectations that the new Federal Reserve chair will adopt a more dovish stance, the options structure that previously caused Bitcoin to decline may now be transforming into a force driving a rebound.
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