Crypto glossary
Gamma exposure (dealer hedging)
Gamma exposure (GEX) estimates how option dealers must hedge as price moves, which can dampen volatility or amplify sharp moves in crypto markets.
Market makers who sell options usually hedge their delta by trading the underlying asset or perpetuals. Because gamma changes their delta as price moves, they have to adjust those hedges continuously. Gamma exposure estimates, strike by strike, the size and direction of that hedging using open interest and assumptions about who is long or short each option.
When dealers are long gamma, they sell into rallies and buy dips, which tends to pin price and suppress volatility, often around strikes with large open interest. When they are short gamma, they must buy as price rises and sell as it falls, which can accelerate moves. Bitcoin analysts track GEX charts from Deribit data, especially ahead of big expiries, and the dynamic gained weight as ETF options listed in the US.
GEX relies on guesses about dealer positioning that public data cannot confirm, and crypto options are still smaller than spot and perpetual markets. Hedging flows matter most near expiry and in quiet conditions; news, liquidations and macro shocks easily overwhelm them.
Example
With heavy dealer long gamma at the 100,000 dollar strike, bitcoin keeps bouncing between 98,000 and 102,000 for a week, then breaks out sharply after Friday's expiry removes the hedging flows.