Bitcoin prices remained largely flat this week, but underlying market structure is undergoing changes. Approximately $2.5 billion in short gamma exposure is set to expire and liquidate, with about $26.7 billion flowing out of the market since the $89,000 peak. Overall positions are approaching a phase reset. The recent rapid decline and subsequent rebound were driven more by options positioning structure than fundamental improvements. As the impact of gamma mechanisms gradually recedes, the dominant factor may shift from options hedging logic to liquidity itself.
Short Gamma Amplifies Volatility: $63,000 and $69,000–$70,000 Emerge as Key Ranges
This round of decline and rebound largely stemmed from short gamma structures. Market makers maintained short gamma positions, forcing them to sell futures to hedge exposure during the price decline, thereby amplifying the downturn and accelerating the move toward $63,000. As risk appetite improved, strengthened tech stocks boosted sentiment recovery, triggering a correlated rebound in crypto markets. Market makers in short gamma positions were forced to buy Bitcoin for hedging during the price recovery, further amplifying the technical rebound. However, no substantive changes occurred in market fundamentals this week, with price fluctuations still primarily driven by positioning structure and gamma factors.
Structurally, the $69,000–$70,000 range concentrates the largest negative gamma exposure, becoming a short-term "bottleneck". A break below would further amplify downside convexity; while a rebound to this range would likely face resistance from hedging flows. Until the related short gamma exposure completes expiration unwinding, price action may continue to oscillate near this region.
As approximately $2.5 billion in short gamma exposure gradually unwinds by February 27th, technical disturbances are expected to diminish. Subsequently, the market will gradually transition from positioning-driven logic to fundamentals and liquidity-dominated trends. However, currently weak trading volumes and limited fund inflows indicate structural pressures remain unresolved.
Capital Outflows and Liquidity Constraints: Rebound Resembles "False Recovery"
Although short-term technical indicators show positive divergence relative to price, our baseline assessment remains: Bitcoin is still in a larger correction phase, with the recent rebound more likely part of consolidation rather than the start of a new sustained uptrend. The core issue remains unchanged: persistent capital outflows continue to suppress the market. According to 30-day actual flow indicators, approximately $26.7 billion has flowed out of the market since retreating from the $89,000 peak. This scale already exceeds levels seen during the industry-wide risk events of July 2022.
Historical experience shows that bear market later stages often feature sharp counter-trend rebounds before weakening again. Markets typically experience multiple "false recoveries" before forming a sustainable bottom. Although models indicate we are closer to a structural bottom, continuous capital outflows suggest the absolute low point likely remains unconfirmed.
More critically, liquidity conditions remain constrained. In this cycle, every relatively clear rebound has been accompanied by significantly increased trading activity, with 24-hour trading volume reaching at least $260 billion. The recent rebound's daily trading volume was only about $118 billion, more indicative of temporary stabilization than明显情绪回暖. Without substantial liquidity expansion, rebounds tend to be unsustainable.
Overall, this week's fluctuations originated more from short gamma mechanism amplification than fundamental improvements. As $2.5 billion in short gamma exposure gradually unwinds, the market will see reduced technical disturbances short-term, but the real key lies in whether fund inflows and liquidity recovery can emerge simultaneously. Until the cumulative $26.7 billion outflow since the peak reverses, any rebound should be viewed as tactical trading opportunities rather than structural trend reversals.
Some views above are from Matrix on Target, contact us for the full Matrix on Target report.
Disclaimer: Markets are risky, investment requires caution. This article does not constitute investment advice. Digital asset trading may carry significant risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions based on information provided in this content.
