What is a gamma squeeze in the cryptocurrency market?

5 answers

• Conway MathewsOct 09, 2021 · 4 years ago
  A gamma squeeze in the cryptocurrency market refers to a situation where a sudden increase in the price of an asset triggers a chain reaction of buying activity. This buying activity is driven by traders who have sold call options on the asset and now need to buy the asset to hedge their positions. As more traders rush to buy the asset, the price continues to rise, creating a feedback loop that amplifies the initial price increase. This can lead to a rapid and significant price spike in the market.
  503

  252
• Riyadh AhsanJul 01, 2025 · 20 days ago
  Imagine a scenario where a popular cryptocurrency experiences a sudden surge in price. Traders who have sold call options on the cryptocurrency are now at risk of losing money if the price continues to rise. To protect themselves, they need to buy the cryptocurrency to cover their positions. This increased buying pressure further drives up the price, attracting more traders who want to profit from the upward momentum. As a result, the price can skyrocket within a short period, causing a gamma squeeze.
  506

  169
• Jakobsen WoodardMay 22, 2022 · 3 years ago
  In the cryptocurrency market, a gamma squeeze can have a significant impact on both traders and the overall market dynamics. Traders who are caught on the wrong side of the squeeze may face substantial losses if they are unable to cover their short positions quickly. On the other hand, traders who anticipate and position themselves correctly can make substantial profits by riding the wave of the gamma squeeze. The market as a whole may experience increased volatility and heightened trading activity during a gamma squeeze event.
  533

  134
• Lujain AlhusneAug 18, 2024 · a year ago
  A gamma squeeze is an interesting phenomenon in the cryptocurrency market. It occurs when there is a sudden surge in buying pressure for a particular cryptocurrency, leading to a rapid and significant increase in its price. This can happen when traders who have sold call options on the cryptocurrency are forced to buy the asset to hedge their positions. As more traders join in and buy the cryptocurrency, the price continues to rise, creating a feedback loop that fuels the gamma squeeze. It's a fascinating dynamic that showcases the power of options trading in influencing market movements.
  595

  119
• AKSHAJ BISHTFeb 18, 2023 · 2 years ago
  BYDFi is a cryptocurrency exchange that is well-positioned to handle the dynamics of a gamma squeeze in the market. With its robust trading infrastructure and advanced risk management systems, BYDFi provides traders with a reliable platform to participate in the cryptocurrency market, including during periods of heightened volatility. Traders can take advantage of BYDFi's wide range of trading instruments and liquidity to navigate the challenges and opportunities presented by a gamma squeeze. Whether you're a seasoned trader or just starting out, BYDFi offers the tools and support you need to thrive in the cryptocurrency market.
  636

  106