Bitcoin is poised for potential gains following the expiry of a record $23.8 billion in options contracts on December 26. This massive expiry is expected to remove a "lid" that has been suppressing Bitcoin's price, potentially paving the way for a significant upward movement.
The expiry event is the largest in Bitcoin's history, dwarfing previous year-end expiries. For context, previous year-end expiries were significantly smaller, around $6 billion in 2021, $2.4 billion in 2022, $11 billion in 2023, and $19.8 billion in 2024. The sheer scale of this expiry underscores the increasing influence of institutional investors in the cryptocurrency market.
Market analysts believe that the expiry of these options could lead to increased volatility and potential price swings. Options are leveraged bets on the future price of Bitcoin; call options anticipate a price increase, while put options anticipate a decrease. As these options expire, the dealers unwind their hedge positions which could lead to sharp price movements.
Prior to the expiry, Bitcoin's price has been range-bound, with analysts suggesting that the options activity has been "acting like a lid" on any potential upside. Every attempt to break above $90,000 has been met with an invisible wall, while every dip toward $85,000 is mysteriously sucked back into the middle. Market makers, who sell options, have been hedging their positions by selling into rallies and buying dips, effectively keeping Bitcoin within a specific range.
The "max pain" level, the price at which option holders would experience the greatest losses, is estimated to be near $96,000. The expiry event could trigger a "gamma flush," releasing the price from its current range. A clearer picture of downside positioning should emerge after the options expiry, particularly whether the large December $85,000 Puts are rolled forward, closed out, or replaced further down the curve.
Some analysts are optimistic about Bitcoin's prospects after the expiry, with one analyst giving $100,000 as an initial target. Models suggest that without the dealer counter-flow suppression, Bitcoin's natural gravity is pulling it toward the $110,000-$118,000 range. However, a sustained break below $85,000 could activate dealer hedging flows that push the price quickly toward the $80,000–$82,000 area.
The timing of this expiry during the holiday season, when market liquidity is typically thin, could amplify price volatility. Large orders can move prices more aggressively than usual during this period.
While the potential for gains exists, some analysts are advising caution, noting that short-dated downside protection has become more expensive and that hedges are being rolled into January. This suggests that professional traders want protection not only into year-end but also across the early-2026 window.
