How tariff tensions amplify bitcoin volatility through market maker hedging

Source: CryptoNewsNet Original Title: As tariff threat hits bitcoin, ‘invisible hands’ may amplify swings: Crypto Daybook Americas Original Link: The market story is clear: Bitcoin and other major coins are down alongside broader market futures as geopolitical tensions rise.

But under the hood, there’s another dynamic at play—one involving the invisible hands that make the trading experience seamless. Those hands belong to market makers, the entities that create buy and sell orders in an exchange’s order book so that large trades can be executed at stable prices.

Market makers in bitcoin’s options market are now in a position where they need to trade in line with the market—buying BTC as it rises and selling as it falls—to keep their overall exposure to price swings neutral. Remember, they make money from the bid-ask spread, and can do so only if their exposure to price swings is constantly hedged.