BTC plunge driven by market maker hedging, says 10x Research

The recent sharp decline in Bitcoin's price from $77,000 to $60,000 was largely driven by the hedging activities of options market makers (MMs), according to an analysis by 10x Research. Markus Thielen, CEO of 10x Research, told CoinDesk that MMs in the options market were found to be in a large short gamma position during the price drop. He explained that MMs, who provide market liquidity by taking the opposite side of investor trades, manage risk in a short gamma position by buying when prices rise and selling when they fall. This activity created additional selling pressure as Bitcoin's price declined. Thielen noted that approximately $1.5 billion in short gamma positions had accumulated as the price fell from $75,000 to $60,000, amplifying the selling pressure during the downturn. The price was only able to rebound after this sell-off was absorbed. He concluded that the growth of the BTC options market has increased the volatility of the spot price due to these hedging activities.