Bitcoin Stuck Between $85K and $90K? $24B Options Trap Expires Soon

Bitcoin has been in a frustrating limbo, fluctuating between $85,000 and $90,000 without any decisive breakout. This situation isn't due to weak buying interest or negative economic factors, but rather the dynamics of the options market.

Key Takeaways

Bitcoin is currently stuck between $85K and $90K due to options market dynamics, particularly dealer gamma exposure.
The “gamma flip” level around $88,000 plays a critical role in current price stability.
Resistance at $90K is primarily from call option activity, while $85K offers strong support due to put option positioning.
The upcoming December 26 options expiry will potentially be the largest in Bitcoin's history, with significant implications for price action.
After the expiry, Bitcoin could experience heightened volatility and possibly break out of its current range, depending on market responses.

Recent data in derivatives shows that the dealer gamma exposure is currently stabilizing Bitcoin's spot price through mechanical hedging processes. This situation has maintained Bitcoin within a narrow band, but these stabilizing pressures will soon expire on December 26.

Understanding the Gamma Flip Level

A critical element in this scenario is the “gamma flip” level, which is currently around $88,000.

When the price exceeds this level, market makers holding short gamma positions are compelled to sell during price rallies and buy during dips to keep a delta-neutral position. This activity reduces volatility and pulls the price back toward the center of the trading range. Conversely, when the price drops below the flip level, the mechanics shift. Selling pressure increases as dealers hedge in the same direction as price movements, thus amplifying volatility.

$90K and $85K: Key Resistance and Support Levels

The $90,000 mark has consistently served as a resistance point. This is largely due to a high concentration of call options positioned at this strike. As the market price nears $90,000, dealers are forced to sell Bitcoin to manage their exposure, creating an artificial increase in sell pressure from these derivatives.

On the downside, the $85,000 point has acted as solid support for the opposite reason. Heavy put option positioning requires dealers to buy Bitcoin as prices approach this level, producing a counterbalancing demand that mitigates selling pressure and supports the price.

Thus, while the market may seem stable, it is held in an artificial balance by conflicting hedging activities.

Futures Liquidations Strengthen Price Range

The options-driven price range is not independent. Data from Coinglass shows that leveraged futures positions are concentrated around the same price points, further reinforcing the $85K-$90K corridor.

Above $90,000, substantial short liquidation levels are present. If the price breaks this resistance, forced short covering could lead to a surge of buy orders. On the other hand, significant long liquidation levels are clustered beneath $86,000, meaning a breakdown there would accelerate further declines due to leveraged long positions being liquidated.

Both the mechanics of options dealer hedging and futures liquidations now work in tandem, intensifying the pressure that keeps Bitcoin confined within its current price range.

Upcoming Options Trap

The upcoming options expiry on December 26 is projected to be one of the largest in Bitcoin’s history, with around $23.8 billion in notional value set to be resolved. For context, total annual expirations were about $6.1 billion in 2021, $11 billion in 2022, and $19.8 billion in 2023. This rapid increase reflects a growing institutional interest in Bitcoin derivatives.

Analyst NoLimitGains notes that approximately 75% of the current gamma profile will vanish after this expiry, meaning the mechanical constraints that have restrained the price within the $85K-$90K range will likely dissipate.

Dominance of Dealer Gamma Over ETF Flows

Currently, dealer hedging activities dominate the market, overshadowing spot demand. Analysts report that dealer gamma exposure is around $507 million, compared to just $38 million in daily ETF transactions—resulting in a staggering ratio of roughly 13 to 1.

This discrepancy helps explain why Bitcoin has shrugged off bullish news. Until the derivatives situation stabilizes, the influence of dealer hedging is likely to take precedence over news about institutional adoption.

What Lies Ahead for Bitcoin

Once the options expiry on December 26 occurs, the price suppression will cease. However, this doesn’t automatically imply a specific price movement direction—rather, it indicates that Bitcoin will have the freedom to fluctuate.

If bulls can successfully defend the $85,000 support level during the expiry, a rally toward $100,000 may become feasible. Conversely, if Bitcoin falls below $85,000 in a low-gamma scenario, it could see a sharper decline.

Traders should prepare for increased volatility as we enter early 2026 while new positions are created. The range-bound price action observed in recent weeks is likely a temporary situation influenced by derivative mechanics, not a reflection of broader market confidence.