Bitcoin’s rally on March 4 looked strange if viewed only through the usual “risk asset is breaking” lens. Oil prices were soaring, shipping insurers were recalculating war risks, and traders were treating the Strait of Hormuz like a live wire. Every headline foreshadowed a full-blown crisis.
However, despite Bitcoin’s notable decline over the past weekend, it has returned to the same $70,000 zone it has been circling around for several weeks.
Two factors explain this movement.
The first is a very simple macro effect. When oil shocks begin to occur in the Middle East, markets quickly price in higher energy costs, supply chain disruptions, and a variety of other negative outcomes. The joint US-Israeli attack on Iran and retaliatory strikes across the Gulf caused chaos in the Strait of Hormuz and caused a severe energy shock.
As threats around the Strait intensified, war risk insurance and freight costs soared, and oil and gas prices rose rapidly.
The second element is a derivative. While this is not the only reason for the recovery, it does explain why BTC could drop in shock and then rebound back into a familiar price range, even though the market remains nervous. The biggest effects come from options, where hedging flows can pull prices into crowded strike zones.
MacroShock supplied the matches, but the options market had already supplied about $70,000 worth of dried wood.
The first shock that hit everything: oil, Hormuz and the cost of moving fuel
The Strait of Hormuz is an important transit point for global oil and gas trade. According to 2024 data, approximately 20 million barrels pass through the Strait every day, representing approximately 20% of global petroleum liquid consumption. (eia.gov)
When conditions in that narrow channel worsen, the market quickly reprices logistics, insurance, and actual export capacity.
From February 28th to March 4th, the Iran war caused the biggest shock in oil markets in decades. The strike and subsequent retaliation threatened exports from the world’s most important oil-producing region.
As traffic across the Channel collapsed, shipping costs soared, insurance companies withdrew coverage, risk zones widened, and some shipping companies even detoured around the Cape of Good Hope.
Oil is the lifeblood of the world economy, and oil prices affect everything else. It affects everything from transportation costs and aviation economics to heating costs, food logistics and inflation expectations.
So when the world’s most important transportation route is threatened and oil prices soar, investors across the market ask the same question: Where does the risk lie now?
Why did Bitcoin initially sell off and then rebound as tensions rose?
Bitcoin’s initial movements during a macroshock often look like a simple series of liquidations. Blaming it for liquidations is not surprising, given that Bitcoin is traded 24/7 and its size means it has fewer friction points than many other financial instruments. Therefore, if a trader wants to reduce his exposure quickly, he will sell what he can sell quickly.
And some of that is certainly true. Bitcoin fell after the weekend strike, with just under $1 billion liquidated between February 28 and March 1.
This is the macro story. When a shock occurs, BTC is sold off quickly and in large quantities.
But the missing piece of the puzzle is why it rebounded faster than anything else and continued to pull toward the same zones that have been important for weeks. That’s where the options market steps in.
The $70,000 area is a dense intersection of options.
Because options contain a lot of Greek letters and dense jargon, they tend to fall off the importance ladder during macroeconomic shocks. But crypto options, especially Bitcoin options, have gotten so big that they have their own gravitational pull.
Large financial institutions now have such large option exposures that they are forced to hedge even small daily price movements.
Gamma measures how quickly an option’s sensitivity changes in response to changes in price. If gamma is high, small movements in Bitcoin can force larger hedge adjustments. This type of trading can increase speed and amplify short-term volatility.
The peak gamma area for options expiring on March 5th and March 6th was approximately $71,000, with an upside range of approximately $70,500 to $73,000. That is the zone where hedging sensitivity is at its peak.
Inside, the market feels more springy and tends to fall and rise faster due to the greater hedging reaction.
Strike data backs up the same points. CoinGlass data shows heavy exposure between $70,000 and $75,000, so these two strikes are doing most of the work.
The $70,000 open interest is approximately 93,000 puts and 92,500 calls, with a notional exposure of approximately $1.32 billion. 75,000, the open interest is around 17,36,000 calls and 9,41,000 puts, with a notional amount of around $1.9 billion. These numbers create a corridor where much of the risk is locked into a narrow set of prices.
You can think of this as the same as a traffic situation. There are roads all over the city, but traffic jams occur at choke points because many lines intersect there. Chokepoints exist because maps concentrate activity there, and strike clusters do the same. Concentrates hedging flows into a narrow price range.
March 27th is important because people focus on deadlines
When I look at the expiry date, I see only one date, March 27th, which dwarfs the rest of the dates.
This maturity includes approximately 111.7,000 calls and 74,97,000 puts for a notional exposure of approximately $13.27 billion.
Total open interest in BTC options has also increased from about $32 billion in late February to about $36 billion to $37 billion in early March, increasing the influence of option-related flows during volatile times.
Large maturities shorten time, concentrate action as traders advance their positions, and require dealers to manage risk more tightly. Hedging may increase as the calendar approaches major deadlines.
This is why the magnetic influence of a particular price range often intensifies by the expiration date.
The closer the calendar gets to March 27th, the more likely the strike corridor around $70,000 to $75,000 will act like rails. Prices remain volatile, headlines still matter, and markets continue to encounter similar risk concentrations.
Relationship between oil and options
The oil crisis added volatility and the options market shaped the direction of prices as the rebound took hold.
The clean sequence applies to the period from February 28th to March 4th.
First, the oil and shipping markets rapidly reassessed risks due to the deteriorating situation in Hormuz and the tightening of export logistics.
Second, Bitcoin was sold off in the first wave because it is liquid and always open, and when volatility increases, investors reduce their exposure significantly. (Fortune.com)
Third, as the sell-off fades and prices begin to recover, Bitcoin encounters a dense corridor of options exposure between $70,000 and $75,000, with peak gamma around $71,000 and the highest hedging sensitivity. Hedgers are forced to adjust more frequently, so rebounds that hit that band can be more reactive.
Fourth, funding increases torque. According to data from CoinGlass, funding spiked repeatedly into the negative in late February and early March, followed by a rebound. This fits in a short-leaning market, as short covering increases buying pressure as prices rise. That buying could push the price into the strike corridor sooner, and once the price reaches the strike corridor, the higher gamma band could amplify the move.
Why the $70,000 Corridor continues to appear until late March
The $13.27 billion expiry is acting as an anchor. Large expirations pull trading activity towards strikes with heavy open interest, as this is where rolling and hedging is most concentrated. Strike data shows $70,000 and $75,000 as major nodes in that corridor.
At the same time, the macro backdrop remained tense. Continued volatility keeps Bitcoin acting like a liquid release valve. It sells at the beginning of the shock and then rebounds where derivatives positioning is concentrated.
That’s why $70,000 continues to appear as a destination even though the headline has nothing to do with cryptocurrencies. Today, the market keeps returning to the same territory because the risks are there.
Three things to look out for next
You don’t have to read the options chain to track whether your $70,000 corridor story still fits.
Notice where the strikes are most concentrated. When open interest rises, the corridor follows, and when open interest falls, the corridor follows.
Please look at the calendar. March 27th is the biggest expiration date in a while, and positioning often re-forms as traders roll or close out risk after a large expiration date.
Look at the macro volatility associated with oil and shipping. The situation in Hormuz has increased crude oil and transportation costs. (reuters.com) If this trend continues, Bitcoin is likely to continue trading as a fast, liquid asset that sells off early and then rebounds into the hedging-heavy derivatives zone.
The oil crisis caused market turmoil, and Bitcoin was the first to fall, falling quickly because of its liquidity. The rebound then flows into the $70,000-$75,000 corridor, where option positioning, hedging sensitivity, and a significant expiry in late March make price action more reactive around the same set of levels.
(Tag to translate) Bitcoin
