The cryptocurrency market is bracing for the largest Bitcoin options expiration in history by notional value, set to occur on December 26. Approximately $23.7 billion worth of Bitcoin (BTC) options are scheduled to expire, with the total figure rising to around $28 billion when including Ethereum (ETH) and other cryptocurrencies.
Options are derivative contracts granting traders the right to buy (calls) or sell (puts) an asset at a predetermined price by a specific date. The massive scale of this expiry means significant capital is tied up in these positions. Market makers (MMs)—entities that sell options to retail traders—typically engage in hedging activities to manage their risk. They profit most when options expire worthless at the "max pain" price.
To maintain a neutral market and protect their positions, MMs buy Bitcoin when prices drop and sell when prices rise. This constant activity creates a "suppressive" force, effectively keeping Bitcoin's price range-bound and leading to what analysts describe as a likely "boring and choppy" trading session ahead of the expiry. The goal is to force the price to remain stagnant to maximize profits on the expiring contracts.
Once the expiry passes—typically around 8:00 AM UTC on Friday—the hedging pressure is lifted. Analysts, including data expert Murphy, warn this removal of the "suppressive weight" usually leads to a return of volatility. Murphy notes that as MMs unwind their hedge positions, the temporary support and resistance levels created by the option structure may dissolve, paving the way for sharp and rapid price movements in Bitcoin until the market repositions itself.
There is a possibility the market could see a brief drop to "hunt liquidity," where algorithms push the price down to trigger stop-loss orders from nervous traders. However, the prevailing analysis suggests a drop is unlikely, as expirations are historically neutral-to-bullish. Furthermore, January has traditionally seen an inflow of capital, which is bullish for BTC. Murphy highlighted that if Bitcoin's price were to retreat to the $80,000–$82,000 range, it could present a speculative opportunity for a short-term rebound.
Technical signals also hint at potential upward movement. Short-term timeframes are showing signs of a "bullish divergence," which occurs when the rate of price decline outpaces capital outflow, indicating a possible correction or temporary recovery. Similar signals in 2021–2022 and 2024–2025 preceded recoveries of varying scales. However, given the current market is still in a "recovery from a bear market" phase, analysts caution that any upside move is more likely to be limited and short-term.
