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Behind the 25% monthly fall of BTC: the dual squeeze of spot selling pressure and options hedging
[Block Rhythm] This month's performance of BTC is truly shocking. The data speaks for itself - a direct retracement of 25% within the month, and this price drop is not just a simple technical collapse.
There is significant pressure in the spot market. Funds are being withdrawn from the ETF, and those dormant wallets that have been inactive for a long time are starting to move. Retail investors' enthusiasm for chasing prices has clearly cooled. With several forces stacking up, the selling pressure has accumulated.
What's worse is that the options market is pouring fuel on the fire. When prices break through certain key levels, market makers have to crazily adjust their positions to hedge risks—this is known as Gamma adjustment. After the 85000 support level was breached yesterday, things began to spiral out of control.
A large number of put options have piled up near this price level, forcing market makers into a “short Gamma” corner. To maintain their balance sheet, they can only continue to sell off coins. The result is: the harder it drops → the greater the hedging pressure → the more aggressively they sell → the harder it drops. A vicious cycle has begun.
The market sentiment is indeed a bit weak right now, and the risk of this spiraling price drop has not been fully released in the short term.