Analysis: BTC ETF Options Could Lead to Gamma Squeeze, Boosting BTC The US Securities and Exchange Commission's (SEC) approval of options on BlackRock's bitcoin spot ETF could lead to a gamma squeeze, a phenomenon where the price of an underlying asset rises sharply as options sellers buy large amounts of the asset to hedge against losses, according to experts cited by Coindesk. "Bitcoin options have negative vega," said Jeff Park, portfolio manager at Bitwise. "So as the spot price goes up, volatility also goes up, which causes the delta to increase rapidly. Market makers who are short gamma will have to buy BTC to hedge, which would create a self-reinforcing loop where market makers have to keep buying at higher and higher prices." A gamma squeeze occurs when the price of an underlying asset rises rapidly, forcing options sellers to buy more of the asset to hedge their positions. This can create a self-reinforcing loop, as the increased demand for the asset drives the price even higher. If a gamma squeeze were to occur in the bitcoin market, it could lead to a significant increase in the price of bitcoin. This would be positive news for bitcoin holders, as it would increase the value of their investments. However, it is important to note that a gamma squeeze is not guaranteed to happen. It is a complex phenomenon that depends on a number of factors, including the volatility of the underlying asset, the number of options contracts outstanding, and the hedging strategies of options sellers. ```