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Bloomberg: Bitcoin's sharp fall enters a dangerous zone, with options factors exacerbating market fluctuations.
On November 22, Bloomberg reported that Bitcoin has plunged sharply, putting the market in a dangerous situation. The sell-off based on options trading has further exacerbated the volatility. Bitcoin has fallen about 25% so far this month. This drop is mainly attributed to Spot dumping, including outflows from large trading platform ETF funds, the sale of wallet assets that have not been used for a long time, and declining demand from momentum investors. On the other hand, options trading positions have also amplified price fluctuations. When Bitcoin falls below certain price levels, traders need to adjust their hedging to maintain a neutral position, a process known as “Gamma exposure” that further amplifies price volatility. One key level is $85,000, which was breached on the 21st. Demand for put options around this strike price is concentrated, forcing market makers to hedge large exposures. In this situation, traders are typically in a “short Gamma” state and will further sell Bitcoin to maintain balance, accelerating the decline.