How the spring explodes. An analysis
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1. Right now, there are about 1MM BTC in the ETF
2. Most of this is passive: RIAs, pensions, long-only allocators.
3. Total call open interest is huge (~5.2M contracts) BUT
4. That does not mean 500k BTC is for sale.
5. Roughly 40,000 BTC has covered calls written ABOVE spot. This is the OG targeted selling + convexity monetization.
6. Market makers are long calls. To hedge, they short BTC with perps.
7. Put numbers on it.
40k BTC worth of calls:
At 90k → MM short ~8k BTC
At 100k → MM short ~20k BTC
At 110k → MM short ~32k BTC
8. This is why the market feels dead:
– downside doesn’t accelerate
– upside keeps stalling
9. If price rises quickly, everything breaks.
At higher levels (say 125k–130k):
Calls go deep ITM.
Delta → 1
Gamma → 0
10. The MM book becomes:
– long synthetic BTC
– short real BTC
- flat P+L but balance sheet blows up
11. At the same time:
– covered-call supply is gone
– no time to reload new calls
– perp shorts are stressed
– liquidations kick in (james wynn)
12. This is how vol can explode.
