Bitcoin Nears $100K as Options ‘Gamma Squeeze’ Points to Violent Price Swings

Bitcoin’s surge above $97,000 has pushed the market back into near-parabolic territory, with on-chain and derivatives data pointing to a structurally different backdrop from prior speculative spikes. A powerful combination of renewed spot demand, reduced profit-taking, and options-driven dynamics is now feeding into what on-chain analysts describe as a rare “gamma squeeze” environment — a setup that can turn otherwise orderly moves into violent price swings.

Price action: from quiet consolidation to explosive breakout

Over the past day, Bitcoin briefly climbed above $97,000, reaching an intraday peak of $97,860, its highest level since November, according to CryptoSlate data. This move extends a strong start to the year that has already pulled the broader crypto market higher alongside it.

What distinguishes this rally is that it is not emerging in a narrative vacuum or an obvious retail mania phase. Instead, multiple on-chain indicators and market structure signals point to a shift in how capital is flowing into Bitcoin — with institutional channels taking a leading role and long-term holders largely stepping aside from the sell side.

CryptoSlate’s analysis frames the current upswing as the product of three overlapping forces: a sharp re-acceleration in US spot Bitcoin ETF inflows, a meaningful slowdown in profit-taking from long-term holders, and an options and futures landscape that is now acting as an accelerant rather than a brake.

Spot flows and whales: ETF demand overwhelms new supply

The most visible shift is happening in the spot market, where regulated ETFs have re-emerged as a dominant conduit for new demand. Data referenced from Coinperps shows that the 12 US-traded spot Bitcoin ETFs took in more than $1.5 billion in inflows over just the last two days.

This matters mechanically. Post-halving, Bitcoin’s new issuance sits at roughly 450 BTC per day. At current prices, that daily supply of newly mined coins represents a relatively modest dollar amount compared with the pace of ETF demand on strong inflow days. Even allowing for the fact that ETF creations do not map one-to-one into immediate market buys, this channel can pull substantial incremental demand into a supply-constrained market.

These flows tend to be episodic and often coincide with institutional portfolio rebalancing or broader “risk-on” shifts in traditional markets. As a result, ETF data has become a kind of macro signal for crypto — one that helps explain why Bitcoin can rally even when crypto-native narratives are subdued.

On-chain analytics from CryptoQuant reinforce the idea that the latest leg higher has been spot-led rather than leverage-driven. The firm’s 90-day Spot Taker Cumulative Volume Delta (CVD) turned positive around $86,000, indicating that aggressive market buy volume was consistently outpacing sell volume well before Bitcoin approached current levels. The move was thus seeded by genuine demand for the underlying asset, not just derivatives speculation.

Crucially, the composition of that demand appears skewed toward larger players. CryptoQuant’s Spot Average Order Size metric flashed “Whale Orders” over the same period, signaling that the bulk of buying was coming from sizeable entities rather than fragmented retail flows. In other words, this phase of the rally has been led by large spot buyers stepping in with conviction, rather than thinly capitalized traders using high leverage.

Sellers step aside: profit-taking and VDD hit subdued levels

On the other side of the ledger, the intensity of profit-taking — especially from seasoned holders — has faded markedly. Glassnode’s recent market notes highlight a sharp decline in realized profit, particularly among long-term investors who had been locking in gains aggressively earlier in the fourth quarter.

On a 7-day moving average basis, realized profit for long-term Bitcoin holders has dropped to about $183.8 million per day, down from peaks above $1 billion per day in late 2025. That shift is significant. Sustained rallies require not only fresh buyers but also a reduction in the supply of coins being offered by investors eager to cash out.

With fewer holders selling into strength, incoming demand faces less immediate overhead, allowing even moderate spot flows to push prices higher more efficiently. This reluctance to sell is further backed by the behavior of the Value Days Destroyed (VDD) indicator, which tracks how much coin-age is being spent on-chain — effectively measuring whether older, long-held coins are moving.

Currently, VDD sits near 0.53 as of January 2026, a historically low reading that suggests the coins being transferred are relatively young. The implication: longer-held, older coins remain largely dormant, and long-term holders are not yet engaging in large-scale distribution despite rising prices.

Historically, the combination of rising price action and muted VDD has aligned with robust expansion phases in prior Bitcoin cycles. When long-term holders stay on the sidelines, the market does not need to repeatedly “chew through” heavily aged supply at every uptick. That dynamic supports the idea that the current breakout above resistance zones is being underpinned by real structural strength, rather than a fragile, short-lived squeeze driven solely by short-term speculators.

Derivatives and the emerging gamma squeeze

The third major driver sits in derivatives markets, where positioning has shifted from a modest headwind to a powerful tailwind.

As Bitcoin’s spot price pushed higher, the market saw a wave of short liquidations across major cryptocurrencies. Coverage cited by CryptoSlate notes that the latest surge produced the largest short liquidation event since Oct. 10 across the top 500 digital assets, based on Glassnode data. These forced buybacks — when short positions are automatically closed as margin thresholds are hit — can create “air pockets” in price, where cascading liquidations briefly amplify upward momentum.

Beyond the headline liquidation numbers, however, options data reveals a more structural change. Glassnode points out that the market experienced its largest-ever reset in options open interest around the late-December expiry. Open interest fell from 579,258 BTC to 316,472 BTC, a reduction of more than 45%. Such a contraction can alter how dealers and market makers hedge their risk exposures as new positions build up at different strikes.

Within this new regime, Glassnode highlights that dealer gamma — a measure of how option hedging needs change as the underlying price moves — is short in the roughly $95,000–$104,000 zone. When dealers are short gamma in a price region, their hedging tends to reinforce the prevailing move: if price rises, they may be forced to buy more spot or futures to maintain hedges, thereby pushing price further in the same direction.

This feedback loop is at the heart of a so-called “gamma squeeze.” Once spot begins to push into a region where dealers are structurally short gamma, hedging flows can mechanically intensify volatility and extend trends, rather than dampen them. In Bitcoin’s case, that means moves through the mid-$90,000s toward six figures could be accompanied by outsized, and potentially abrupt, price swings as options books rebalance.

Futures data from CryptoQuant suggests that leverage participation came later in the sequence and skewed more toward retail. The firm notes that BTC Futures Taker Buy Volume only turned positive around $91,400, after spot-led demand had already established an uptrend. That sequencing bolsters the view that derivatives are acting as an accelerant layered on top of a fundamentally spot-driven rally, rather than being the primary catalyst from the outset.

Macro and policy tailwinds: friendlier backdrop, lingering risks

Macro conditions have also been incrementally supportive. The latest US Consumer Price Index (CPI) release showed headline inflation at 2.7% year-over-year in December and core CPI at 2.6% year-over-year, with monthly headline inflation at 0.3% on a seasonally adjusted basis.

For risk assets like Bitcoin, the key question is how these readings feed into expectations for real yields and future policy tightening. Real yields on US 10-year TIPS remain elevated at around 1.83% in recent prints — historically meaningful levels that still impose a cost of capital. But a softer inflation impulse can ease fears of further upside shocks in rates, allowing risk appetite to expand on the margin.

Bitcoin’s correlation with macro factors is regime-dependent. At times, it behaves like a high-beta risk asset; at others, it trades more idiosyncratically. In the current setup, where ETF flows and institutional positioning are in focus, a reduction in inflation anxiety appears sufficient to remove some headwinds, especially when combined with strong spot inflows and supportive derivatives dynamics.

In the background, regulatory and policy developments in the US continue to evolve. Lawmakers are promoting the CLARITY Act as a key legislative effort aimed at delineating agency responsibilities and reducing reliance on “regulation-by-enforcement” in crypto market oversight. While stakeholders in the industry differ on aspects of the bill, there is a broad sense that a more predictable framework could compress the perceived risk premium around Bitcoin over time.

A clearer, less adversarial regulatory structure would not directly determine short-term price action, but it could influence how large institutions size and time their allocations. Against the current backdrop of strong ETF demand, even incremental policy clarity may support the argument that Bitcoin is transitioning further into a mainstream, allocatable asset class.

Key levels and scenarios: can Bitcoin sustain the move?

With Bitcoin hovering just below the psychological $100,000 mark, the market is now focused on whether this advance can evolve into a sustained leg higher or whether it will stall under the weight of overhead supply.

Glassnode’s on-chain models flag the Short-Term Holder (STH) cost basis — the average price paid by recent buyers — around $99,100 as a key pivot. When price trades above the STH cost basis, short-term holders are generally in profit, which tends to reduce forced selling on dips and embolden momentum-driven flows. Conversely, if price repeatedly fails to hold above that level, nervous short-term holders may sell into weakness, reinforcing a range-bound environment.

At the same time, Bitcoin is moving into a broad overhead supply zone where many prior buyers’ cost bases are clustered. Glassnode notes a range between roughly $92,100 and $117,400 as a region with substantial realized price density. As spot trades higher within this band, multiple cohorts of investors are likely to approach breakeven — a natural point at which some will choose to offload risk.

That setup sketches two primary scenarios:

• Continuation: If ETF inflows remain robust and Bitcoin can reclaim and hold levels around the ~$99,000 STH cost basis, the market may be able to gradually absorb overhead supply. In this case, the existing gamma structure in options could continue to magnify upside moves as dealers hedge, underpinning a grind higher toward the upper end of the realized price band.
• Failure: If price consistently rejects below the STH cost basis and macro conditions turn less forgiving — for example, via renewed increases in real yields — the current move risks resolving into another failed breakout. In that scenario, overhead supply could reassert itself, and the derivatives-driven accelerant might flip direction, making downside moves equally abrupt.

For traders and market-focused investors, the message from the data is nuanced. The ongoing rally is anchored in strong spot demand, reduced selling from long-term holders, and a derivatives structure that currently amplifies upside. At the same time, the emerging gamma squeeze dynamic implies that as Bitcoin edges toward and beyond $100,000, price action is likely to become more volatile, not less. Position sizing, leverage use, and close attention to ETF flow and options positioning will be critical as the market navigates this high-stakes zone.