BTC Rises 2.6% Amid Thin Liquidity and Institutional Support

Source: DefiPlanet Original Title: BTC Rises 2.6% Amid Thin Liquidity and Institutional Support Original Link:

Quick Breakdown

• Bitcoin climbs 2.6% in early Asia trading, supported by spot and perpetual buying amid low liquidity.
• Gamma-driven dynamics on Deribit fuel upward momentum, with BTC briefly hitting 90k and call options activity rising.
• Put skew declines and open interest drops 50% post-expiry, signalling reduced near-term downside protection and sidelined capital.

Market Movement

Bitcoin rose roughly 2.6% during early Asia trading, echoing movements seen during the recent holiday period. With liquidity muted amid year-end conditions, pockets of elevated volatility were observed despite the absence of major news catalysts. The rally does not appear to have been driven by leveraged liquidations, which totalled less than $40 million in long positions. Instead, the move was likely supported by spot and perpetual buying in thin market conditions, with some demand potentially originating from institutional players. Recent comments hinting at additional BTC purchases may have reinforced this buying pressure during illiquid trading windows.

Gamma-driven Moves Amplify Gains

Following Friday’s options expiry, BTC perpetual funding on Deribit surged from near-flat levels to above 30%. Dealers previously positioned long gamma to stabilize BTC’s price are now short gamma to the upside. As prices rise, these participants hedge by buying spot BTC or near-dated call options, creating a feedback loop that amplifies upward momentum. Earlier in the session, BTC briefly touched the 90k level, triggering aggressive buying in both BTC perpetuals and the BTC-2JAN26-94k call option. Analysts note that a similar gamma-driven squeeze could emerge if BTC sustains a move above 94k in the coming sessions.

Support Levels and Market Positioning

On the downside, put skew has declined materially since last week after the large December 85k put was not rolled, indicating reduced near-term demand for downside protection. The 86k level has remained resilient despite ongoing spot ETF outflows and selling pressure during US trading hours. Post-expiry, open interest has dropped roughly 50%, suggesting a significant portion of capital is temporarily sidelined. How this capital is redeployed across spot, options, or perpetuals could reintroduce volatility as positioning rebuilds.

Meanwhile, BTC has shown tentative signs of stabilization following dovish comments from Federal Reserve officials that have raised expectations of a December rate cut. Traders now price in roughly a 75% probability of a rate reduction next month, up from 30-40% just last Thursday, providing a potential tailwind for year-end market positioning.