As the year draws to a close, Bitcoin is nearing a critical juncture that could trigger significant market volatility. This Friday, December 26, sees the expiration of over $23 billion in Bitcoin options—the largest such event in the cryptocurrency’s history.
Market expert NoLimit explained on X (formerly Twitter) why this matters. Options are essentially leveraged bets on Bitcoin’s future price: calls bet on a rise, while puts bet on a decline. Upon expiration, these contracts either become worthless or force hedging actions that require buying or selling Bitcoin in the spot market.
With $23.6 billion in options expiring at once, a massive amount of risk is being cleared from dealer books in a single day, which is a major source of volatility. For comparison, year-end expiries in recent years were much smaller: about $6 billion in 2021, $2.4 billion in 2022, $11 billion in 2023, and $19.8 billion in 2024. The unprecedented scale of this expiry underscores how institutional investors now dominate the market.
The timing is particularly significant. Dealers have hedged their positions around key Bitcoin price levels, and as these options expire, those hedges will be unwound. This could trigger sharp price moves in either direction, especially amid the current low-liquidity environment. With trading volumes subdued during the holidays, individual orders can have an outsized impact, potentially leading to violent price swings.
Adding to the complexity, analyst MartyParty noted that significant gamma exposure is concentrated in critical price ranges, especially between $86,000 and $110,000. An estimated $238 million or more in high gamma is set to expire, which will amplify volatility through delta-hedging flows as Friday approaches. The “max pain” point—where Bitcoin option sellers face the greatest losses—is $96,000.
Analysts from CryptoQuant added that while downside positioning has eased (with open interest in $85,000 puts declining), there is still a notable volume of $100,000 calls. This points to cautious but persistent optimism for a potential “Santa rally.” Risk reversals also suggest bearish sentiment is softening as Bitcoin’s price stabilizes.
At the time of writing, Bitcoin is trading at $87,292, down 2.5% over the past 24 hours and about 30% below its all-time high.
Frequently Asked Questions
FAQs Bitcoin Options Expiration Market Impact
Beginner Questions
1 What is a Bitcoin options expiration
An options expiration is the date when a contract giving someone the right to buy or sell Bitcoin at a set price becomes void If not used by this date the contract expires worthless
2 Why does an options expiration shake up the market
Because large traders with expiring contracts may buy or sell a lot of Bitcoin in the spot market to influence the price in their favor just before expiration or to fulfill their obligations causing increased volatility
3 What is a max pain price
Its the Bitcoin price at which the maximum number of options contracts would expire worthless Some believe the market may gravitate toward this price at expiration to cause the most financial loss to option buyers
4 What are call and put options
Call Option A bet that Bitcoins price will rise Gives the holder the right to buy at a set price
Put Option A bet that Bitcoins price will fall Gives the holder the right to sell at a set price
5 As a regular investor should I be worried about this
You should be aware not necessarily worried Expect potentially higher price swings and trading volume around the expiration time Its often wise to avoid making impulsive trades based on this shortterm volatility
Intermediate Advanced Questions
6 What specific metrics should I watch for this expiration
Watch the
Notional Value The total dollar value of contracts expiring
PutCall Ratio Whether more puts or calls are set to expire
Key Strike Prices The price levels with the highest concentration of open contracts as these can act like magnets for the spot price
7 What is gamma exposure and why does it matter
Gamma measures how sensitive an options delta is High gamma near a key price level means market makers may need to rapidly buy or sell Bitcoin to hedge their positions as the price moves accelerating price swings
8 Could this expiration trigger a major rally or crash
While it can amplify an