Bitcoin is plunging into a dangerous zone — and option-driven selling is amplifying its volatility.

The largest cryptocurrency sank as much as 7.6% on Friday to US$80,553, extending a decline that has erased nearly 25% of its value this month. November is now shaping up to be Bitcoin’s worst month since the Terra and FTX collapses in 2022 — a period that triggered a wave of corporate failures across the crypto industry.

The latest downturn has largely been fueled by spot-market selling — including redemptions from major exchange-traded funds, long-dormant wallets reactivating and offloading their holdings, and fading demand from momentum traders.

Option positioning, however, has also contributed to the turbulence, magnifying price swings as Bitcoin breaks through key levels that force dealers to adjust their hedges to remain neutral — a process known as gamma exposure.

“Bitcoin remains vulnerable to ongoing technical pressure, with the potential for gamma-driven acceleration as it breaches key support levels,” said Chris Newhouse, head of research at Ergonia, a firm specializing in decentralized finance.

One such level — US$85,000 — was broken on Friday morning. This strike attracted strong demand for put options, requiring market makers to hedge their large exposures. In situations like this, dealers are typically “short gamma,” meaning they must sell more Bitcoin as the price drops to stay balanced — a dynamic that can worsen the fall.

These firms, often high-volume liquidity providers, aim to remain neutral by adjusting exposure as prices shift. But when Bitcoin breaks through heavily traded strikes, the resulting hedging activity can act as a technical accelerator.

The next critical level is US$80,000, where option models suggest hedging behavior shifts direction. Around US$85,000, dealers are “short gamma,” making price declines riskier for them and pushing them to sell even more.

But near US$80,000, their position flips. Dealers become “long gamma,” meaning further price drops actually reduce their risk and force them to buy Bitcoin to stay balanced — a shift that can dampen the impact of continued selling. Bitcoin traded near US$85,130 at 5:18 p.m. in New York on Friday.

Traders have been buying up put options at both strikes, according to Deribit — intensifying pressure on dealers who sold those contracts. Dealer hedging is mostly a technical accelerant rather than the main cause of the downturn, but it highlights how market depth has thinned in recent weeks. With less liquidity on major exchanges, sharp drops are harder to absorb. In such conditions, even routine selling can move prices much farther and faster than normal.

“Based on dealer inventories for BTC options on Deribit — also known as gamma exposure levels — dealers are likely to accelerate the move lower until Bitcoin hits US$80,000,” said Greg Magadini, director of derivatives at Amberdata.

“At US$80,000, dealers move back into long gamma, which forces them to become BTC buyers at those levels.”

While the options market is adding to the volatility, most crypto-derivatives activity still resides in perpetual futures, and that market is also showing signs of similar stress. Open interest remains high, but many bullish traders are now trapped in losing positions.

As prices fall, forced liquidations begin, triggering automatic sell orders that deepen the decline.

Buy orders had previously accumulated near the prior highs around US$98,000, as bulls attempted to catch a rebound. But once Bitcoin plunged below US$85,000, those bids evaporated.

The downward pressure has been amplified by outflows from several major Bitcoin exchange-traded funds, which had earlier provided a steady source of demand throughout the year. As those funds shrink, they remove a layer of consistent buying interest that once helped stabilize the market during extreme moves. Without this reliable inflow, the market becomes far more sensitive to ordinary selling, as there is less passive demand to offset it.

These overlapping forces — earlier hedging flows, forced futures selling, and thinning market liquidity — are not unique to crypto. Similar patterns can appear in any fast-moving market when heavy selling collides with shallow liquidity and major players attempt to manage risk at the same time.

The same effects are often seen in stocks, bonds, and commodities when rapid price swings interact with risk-control strategies. Traders now have their eyes on the US$80,000 level.

A clear break below it could trigger counterbalancing flows from dealer hedging — but with momentum sellers still active, any rebound is likely to be short-lived.