Dealer Hedging in Negative Gamma Set to Amplify Bitcoin and Ether Swings

Options market makers are positioned to amplify price swings in bitcoin (BTC, $66,834) and ether (ETH, $1,891), according to gamma exposure data from the options analytics platform Greeks.Live. GEX is negative, or short, across the entire price range where bitcoin currently trades, which mechanically forces dealers to trade in the direction of the move rather than against it.

The mechanics are straightforward. When a trader buys or sells an option, a market maker typically takes the other side, ensuring there is nearly always a counterparty and the market runs smoothly. Dealers do not intend to bet on direction; they earn money from the small gap between their buying and selling prices. Price moves leave them exposed anyway, so they buy or sell coins, or futures tied to those coins, to return to market-neutral. That practice is hedging.

Why does negative gamma matter now?

Hedging can either calm the market or magnify its swings, and at present it is doing the latter. According to Greeks.Live, GEX is negative across bitcoin's current trading range. In a short-gamma regime, dealers are likely to sell coins or futures as prices fall and buy them as prices rise, in both cases to rebalance their books — exaggerating the prevailing move either way.

"Both Bitcoin and Ether have slipped into deep negative gamma territory," Adam, a macro researcher at Greeks.Live, told CoinDesk. "Deep negative GEX means dealers are net short options—largely driven by traders bidding up downside puts or chasing breakout calls. To stay hedged in a short-gamma regime, dealers must trade with the prevailing momentum, not against it."

Puts are contracts that profit from a fall; calls profit from a rise. Demand for both downside puts and breakout calls, per the researcher, is what pushed dealer positioning short.

What does the GEX chart show?

Greeks.Live's GEX chart for bitcoin shows the positioning bar by bar, with each bar representing market makers' gamma exposure at a specific price level. At 12:37 UTC on Saturday, with bitcoin trading near $67,191, the bars were red — indicating negative gamma — from roughly $58,000 to $72,000. The largest negative bars sit near $68,000 and $70,000, meaning dealer hedging flows are most concentrated there.

Notably, there is no green — no positive gamma — below the current price until the area around June's low of $57,700. In plain terms, nothing in dealer positioning is positioned to soften a decline of nearly $10,000 from current levels. That absence of a cushion is the operational detail worth watching, though the researcher's framing describes positioning, not a prediction; positioning can shift as options expire or traders reposition.

The takeaway: as long as GEX remains negative across this range, routine dealer hedging is more likely to reinforce volatility than dampen it.