Bitcoin is experiencing a gamma squeeze, similar to the Gamestop situation. Gamma is the rate of change of delta, which measures the price change of an asset when another asset moves. In the case of bitcoin, the gamma squeeze occurs when options dealers are short delta and have sold naked calls. As the price of bitcoin rises, owners of calls exercise their right to buy the asset, forcing the sellers to buy back the calls or buy bitcoin, which drives the price up even more. However, the effect of gamma on bitcoin's price during Tuesday's rally was inconsequential compared to the overall market capitalization and liquidity of bitcoin. The size of Deribit options dealers' gamma exposure was only $15 million per 1% increase in bitcoin's price, while bitcoin gains $14 billion for every 1% increase in its price.



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