Bitcoin May Remain Close to $100K as Market Makers Navigate Risks of an Overheated Market Pullback.

Bitcoin Stability at $100K Supported by Market Makers’ Hedging Amid Pullback Risks

Bitcoin (BTC) and the broader cryptocurrency market are seeing a strong demand for leveraged bullish positions, signaling that the market may be overheated. While market makers’ hedging activity is expected to provide support for Bitcoin around the $100,000 mark, the growing market activity also increases the likelihood of pullbacks for other cryptocurrencies.

Bitcoin, the largest cryptocurrency by market capitalization, broke through the $103,000 barrier early Thursday after President-elect Donald Trump appointed Paul Atkins, a prominent crypto supporter, as the new chairman of the U.S. Securities and Exchange Commission (SEC). The announcement triggered a buying rush, sending funding rates for perpetual futures soaring, which indicates growing demand for long positions and potential overcrowding. In such conditions, even a small price pullback could lead to large liquidations (forced sales by exchanges due to margin calls), creating increased volatility.

Griffin Ardern, head of options trading and research at BloFin, a crypto financial platform, stated that the options market could help stabilize Bitcoin’s price. When options prices increase more rapidly than the underlying asset, creating a positive gamma imbalance, market makers typically sell their holdings to neutralize their exposure. When the imbalance is negative, they tend to buy the underlying asset, acting as a counterforce and preventing extreme price movements.

“Bitcoin could remain relatively stable around $100,000 in the short term due to the hedging strategies employed by market makers,” Ardern explained. “The support from the options market may help offset the impact of deleveraging, at least in part.”

Bitcoin’s annualized funding rate has surged to nearly 100%, surpassing even speculative assets like Dogecoin (DOGE), according to data from VeloData. Other altcoins such as XRP, CRO, and XMR also have funding rates exceeding 100%, showing strong demand for leveraged long positions.

Felix Hartmann, founder of Hartmann Capital, speculated that Bitcoin’s recent price surge may be largely driven by leverage. “The volume-weighted average price suggests that Saylor has spent billions, and the funding rates indicate this price move was likely fueled by leverage,” Hartmann said, referring to Michael Saylor, executive chairman of MicroStrategy, the largest publicly traded holder of Bitcoin. “I wouldn’t be surprised if we see a 20-30% correction in the market. The 80s could be a reasonable target.”

Hartmann emphasized that sustained demand, beyond institutional buys like those from MicroStrategy, is essential for maintaining the rally. Many observers on social media believe the market will either continue rising, justifying the cost of maintaining bullish positions, or it will correct sharply in the near future.

Despite the support provided by market makers’ hedging, Bitcoin’s volatility could return as the year ends.

“The positive gamma at $105,000 on options expiring December 27 could offer some stability, but once those options expire, the support will dissipate, increasing the uncertainty around price movements,” Ardern noted.

Options are financial contracts that grant the buyer the right, but not the obligation, to buy or sell the underlying asset at a specific price by a future date. Call options give the right to buy, while put options give the right to sell.

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