By Omkar Godbole (All times ET unless indicated otherwise)
The market story is clear: Bitcoin (BTC) and the other major coins are down alongside Nasdaq 100 futures as President Donald Trump's tariff threat against the European nations opposing his takeover of Greenland ramps up geopolitical tensions.
But, under the hood, there's another dynamic, and it involved the invisible hands that make the trading experience seamless. Those hands belong to market makers, the entities that create buy and sell orders in an exchange's order book so that large trades can be executed at stable prices.
Market makers in bitcoin's options market are now in a position where they need to trade in line with the market — buying BTC as it rises and selling as it falls — to keep their overall exposure to price swings neutral. Remember, they make money from the bid-ask spread, and can do so only if their exposure to price swings is constantly hedged.
This process is called gamma exposure hedging, or managing the change in market makers' exposure as bitcoin's price moves. Right now, market makers mostly have negative gamma exposure from $86,000 to $95,000 (check TA section), according to data from Deribit, tracked by Amberdata.
Negative gamma means their risk increases as the price changes, so they buy into strength and sell into weakness to hedge their positions, amplifying the price swings. A similar negative gamma occurred in S&P 500 option last October.
Beyond this dynamic, observers remain focused on geopolitics and the impending Supreme Court ruling on Trump's tariff policies.
"Much of the tension is coming from political noise, including President Trump’s barrage of early-2026 headlines regarding military intervention in Venezuela, tariff threats toward Europe and Iran, and renewed efforts to replace Fed Chair Powell," Emir Ibrahim, an analyst at digital asset trading firm Zerocap, said.
A Supreme Court ruling against Trump could create near-term volatility around trade policy, refund liabilities and deficit expectations, Ibrahim said.
In traditional markets, the U.S. 10-year yield has hit a four-month high of 4.37% alongside a weaker dollar and stock futures, pointing to a broad-based weakness in U.S. assets. Stay alert!
Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today
For a more comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead".
• Jan. 20, 7 a.m.: BNB Chain to host an X Spaces session with PancakeSwap, Lista DAO, United Stables, and Venus Protocol.
• Jan. 20, 6 p.m.: Avalanche to host an AVAX Talk where a "major Avalanche announcement" is being made.