An important signal from the options market is indicating that Ethereum is likely to accelerate, with a short-term target aimed at the $4,400 mark.

Gamma – The 'Hidden' Index Driving Price Volatility

The indicator that analysts are paying attention to here is the Net Gamma Exposure of market makers on the Deribit options exchange for ETH.

Gamma is a core measure in options trading, reflecting the rate of change of delta of an option contract as the underlying asset's price fluctuates. In other words, gamma indicates the degree of 'sensitivity' of the contract to changes in the price of ETH.

Short Gamma Mechanism and Self-Amplifying Price Effect

When dealers fall into a short gamma state, they are forced to buy the underlying asset when prices rise and sell when prices fall to hedge risk. This inadvertently amplifies price movements in the same direction as the market.

Under normal conditions, dealers profit from the bid-ask spread and always try to maintain a delta-neutral position. However, when they are short gamma, their hedging behavior can turn into a force pushing prices further away.

$4,000 – $4,400 Region: Acceleration Boost

According to data from Amberdata, there is currently a large amount of short gamma positions concentrated between the strike prices of $4,000 and $4,400.

When ETH surpasses the $4,000 mark, dealers will start buying ETH to hedge, creating a positive 'feedback loop' that pushes prices up faster. The nearest target of this upward force is $4,400 – where the gamma structure shifts to positive gamma. At that point, dealers will trade against market trends to curb price volatility.

This makes $4,400 a reasonable 'price magnet' for the current price increase.

Analysis from Analysts

Greg Magadini – Director of derivatives at Amberdata – stated:

"If the market momentum is strong enough to break through $4,000, we will see dealers become net buyers of ETH at higher prices, potentially leading to a rapid surge to $4,400 – the next large gamma inventory region."

Conclusion

Signals from the options market are subtly indicating that ETH may continue to break out rapidly in the short term. Investors need to closely monitor the $4,000 mark, as when this barrier is broken, the $4,400 region could be reached in a short time due to the amplification effect from the dealers' hedging strategy. $ETH