Bitcoin Poised for Breakout as Gamma Suppression Nears Expiration

TLDR: 

• Bitcoin trades 27% below $118K Power-Law value, indicating market compression, not overvaluation.
• Net gamma of −$117M pins Bitcoin near $85K, limiting short-term upside potential.
• Dec 19 gamma expiry of 17% may slightly loosen the $85K price pin.
• Dec 26 gamma expiry of 47% expected to trigger structural reset and open trend path.

Bitcoin is currently experiencing a period of constrained price movement as it navigates two distinct market forces. 

According to market analysis, the cryptocurrency is trapped between the long-term Power-Law trend and short-term options gamma dynamics. The Power-Law trend represents the mathematical trajectory toward $118,010, while options gamma temporarily restricts volatility.

Recent data shows Bitcoin trading around $85,879, approximately 27.2% below its Power-Law fair value. 

This discrepancy does not indicate overvaluation; rather, it signals a period of compression. Dealers are actively managing positions around key strike levels, influencing the market’s short-term behavior.

Gamma Decay and Market Suppression

Options gamma plays a central role in suppressing Bitcoin’s price movement. Net gamma currently stands at −$117 million, forcing dealers to hedge aggressively below $85,000. 

This hedging activity creates a strong support level, effectively pinning the price. Upside momentum remains limited below the $90,847 gamma flip, where positive gamma is absent.

David, a market analyst, noted in a recent tweet, “Bitcoin is trapped between two forces: long-term mathematical inevitability (Power Law) and short-term mechanical suppression (options gamma).” 

The distinction between these forces lies in timeframes. While the Power-Law trend does not expire, gamma exposure diminishes according to a defined decay schedule.

The gamma decay timeline shows key events approaching. On December 19, approximately 17% of total gamma, equaling around $90 million, will expire. 

This first phase will slightly weaken the $85,000 support and allow volatility to return. Following this, a larger structural reset occurs on December 26, when nearly 47% of total gamma, approximately $243 million, will expire.

Path Toward Power-Law Fair Value

As gamma expiration approaches, Bitcoin’s price may experience more freedom to move. Historically, large pin releases mark the start of the next trend, signaling the potential for a sustained move. 

The December 26 event is expected to release nearly half of dealer positions, opening the path toward $118,010.

The current coil in the market remains tight, but traders and investors can anticipate a shift once the gamma suppression diminishes. 

Until then, the $85,000 level remains a critical floor, serving as a temporary anchor for price action. The contrast between short-term mechanical pressure and long-term Power-Law trajectory underscores the market’s layered dynamics.

Dealers and analysts are closely watching the upcoming gamma events for directional cues. As David highlighted, these events represent pivotal moments for market structure. 

The interplay between expiring options and inherent long-term trends will shape Bitcoin’s movement in the final days of December.

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