A significant concentration of Bitcoin options, with a combined notional value of roughly $23.8 billion, is set to expire on December 26, 2025. This event is currently shaping year-end market behavior by limiting price movement and increasing the likelihood of a broader repricing once the contracts roll off.
Derivatives data reveals that open interest is heavily concentrated around key price levels near the current spot price. Significant put option positioning around the $85,000 strike reflects institutional demand for downside protection. Simultaneously, large call option positions near the $100,000 strike are not necessarily bullish bets but represent strategies like covered call selling, where holders cap upside potential in exchange for yield or reduced risk. This combination of downside hedging and upside limitation is effectively narrowing Bitcoin's trading range.
Analysts, including on-chain expert Murphy, note that these positions are predominantly held by institutional investors such as ETF-related hedge accounts, corporate Bitcoin treasury managers, and family offices. These entities use options to manage balance-sheet risk and control volatility rather than for short-term speculation. Their conservative risk management is forcing market participants to limit price movement until the expiration window passes.
As a result, Bitcoin's price action is expected to remain constrained until the expiry. The downside is partially supported by hedging, while upside moves face resistance from call option positioning. Jeff Park, Chief Investment Officer at ProCap BTC, highlighted that the practice of large holders selling covered calls adds steady sell-side pressure without increasing spot demand, as market makers hedge their exposure by selling spot BTC, further suppressing volatility and limiting gains.
Focus is now shifting to the post-expiration dynamics. Once these contracts expire, market participants will need to reassess and rebalance their exposure, potentially rolling positions forward or closing them entirely. This transition period could remove the current structural constraints, leading to increased uncertainty and potentially larger price movements in both spot and derivatives markets.
