Key Takeaways
Dealer net gamma exposure on Deribit shows a short gamma pocket between $4,000–$4,400.
Short gamma forces dealers to buy ETH as price rises, amplifying upward moves.
A break above $4,000 could trigger a self-reinforcing rally to $4,400.
A hidden indicator from the Ethereum options market suggests Ether (ETH) could be primed for a rapid rally toward $4,400. The signal comes from net gamma exposure data on Deribit, the largest crypto options exchange, which tracks how market makers adjust their hedging as prices move.
What the Gamma Signal Means for ETH
According to data from Amberdata, dealers are currently in a short gamma position between strikes $4,000 and $4,400. In short gamma conditions, dealers must buy the underlying asset as prices rise and sell as they fall. This can create a feedback loop that amplifies price momentum.
With ETH now trading above $4,000, that dynamic could force dealers to buy even more ETH to hedge their exposure — potentially accelerating the rally toward $4,400.
Why $4,400 Matters
The $4,400 level marks a shift to positive gamma, where dealers begin trading against the market to dampen volatility. Until then, the short gamma zone acts as a price magnet, pulling ETH higher as hedging flows compound bullish pressure.
“If the momentum in the market is strong enough to get through $4,000, we see dealers also become net buyers of ETH at higher prices, potentially leading to a quick rally to $4,400,” said Greg Magadini, director of derivatives at Amberdata.
Market Context
Ethereum’s latest breakout comes amid broader crypto market strength, with Bitcoin holding above $117K and multiple altcoins posting double-digit gains. If the options-driven momentum aligns with spot market demand, the $4,400 target could be reached faster than fundamentals alone might suggest, according to CoinDesk.
