Bitcoin experienced a significant downturn, dropping as much as 7.6 per cent on Friday to $US80,553. This decline has deepened a selloff that has erased nearly 25 per cent of its value this month. November is shaping up to be bitcoin’s worst month since the collapses of Terra and FTX in 2022, events that triggered a cascade of corporate failures across the cryptocurrency industry.
The slump has been driven primarily by spot selling, including redemptions from exchange-traded funds. Long-dormant wallets offloading holdings, and fading demand from momentum traders are also contributing to the decline. Options positioning has further amplified the price swings as Bitcoin breaches levels where dealers adjust hedges to stay neutral, a process known as gamma exposure.
According to Chris Newhouse, director of research at Ergonia, a firm specialising in decentralised finance, Bitcoin remains vulnerable to continued technical pressure, with the potential for a gamma-driven acceleration through key support levels. The $US85,000 level was breached earlier on Friday. This strike had attracted heavy demand for put options, leaving market makers exposed to hedge large positions.
In this setup, dealers are typically short gamma, meaning they sell more Bitcoin as it falls to stay balanced – a dynamic that can compound downward moves. The next key level is $US80,000, where options models show the hedging dynamic flips.
