How Will Markets React to $2B Bitcoin Options Expiring Today?

Approximately 20,000 Bitcoin options contracts will expire on Friday, Jan. 3, in the first such event of 2025.

They have a notional value of $1.93 billion, which is a fraction of last week’s mammoth end-of-year expiry event, so the impact on spot markets is likely to be minimal.

Bitcoin Options Expiry

This week’s batch of Bitcoin options contracts has a put/call ratio of 0.68, meaning that there are more long (call) contracts expiring than short (put) contract sellers.

Open interest, or the value or number of options contracts yet to expire, is highest at the $120,000 strike price, with $1.4 billion in OI, according to Deribit. There is also $1.3 billion in OI at $110,000, so derivatives traders remain bullish with open contracts at higher strike prices.

On Jan. 2, Deribit reported that the continuous trading market, or perpetual swaps, is showing more optimistic signals, similar to what was seen before the recent downturn.

“Options markets report a similarly mixed message: BTC’s short-tenor volatility smiles remain slightly more skewed toward OTM puts, while longer tenors have increased their bullish tilt.”

It added that December’s end-of-year expiration of a significant proportion of the market’s OI in options “did not result in the fireworks that some expected.”

Earlier this week, crypto derivatives provider Greeks Live observed that a major short call position had been put on Bitcoin with a notional value of $42 million. The speculator is betting that BTC will not exceed $150,000 by March 28 and stands to net $900,000 from the bet if successful.

In addition to today’s Bitcoin options, around 205,000 Ethereum contracts are expiring today. These have a notional value of $710 million and a put/call ratio of 0.82.

This brings Friday’s combined crypto options expiry notional value to around $2.6 billion.

Crypto Market Outlook

Around $160 billion has entered crypto markets since the beginning of the year on Wednesday, lifting total capitalization to $3.56 trillion.

Bitcoin has had a solid 24 hours, gaining 1.7% to stand close to the $97,000 level during early trading in Asia on Friday. However, it remains range-bound and needs to clear resistance at the psychological $100,000 level to see further momentum.

Meanwhile, Ethereum, which has been predicted to perform well this quarter, has fared better, gaining 2% on the day as it approaches the $3,500 price level. ETH needs to clear $3,600 to break resistance and notch further gains.

The altcoins were pretty much all in the green this Friday, with most of them outpacing Bitcoin on daily gains.