Options expiry is a significant, yet often overlooked, factor influencing the price fluctuations of Bitcoin (BTC) and Ether (ETH). As the expiry date of a large volume of options contracts approaches, it can create substantial volatility in the crypto market. On September 26, 2025, the crypto market faced one of its biggest stress tests of the year as over $21 billion in Bitcoin and Ethereum options expired.
Understanding Options and Expiry
Options contracts grant the holder the right, but not the obligation, to buy (call option) or sell (put option) an asset like BTC or ETH at a predetermined price (strike price) before a specific date (expiry date). As the expiry date nears, the option's price becomes more sensitive to the underlying asset's price. A large number of options expiring simultaneously can amplify price movements in the spot market.
Impact on Market Sentiment and Price
The balance between call and put options provides insight into overall market sentiment. A put-call ratio above 1 indicates a bearish outlook, while a ratio below 1 suggests bullish expectations. Leading up to the September 26, 2025 expiry, Bitcoin showed bullish sentiment with $16 billion in options expiring and a put-to-call ratio of 0.71, suggesting a prevalence of call options. In contrast, Ethereum's put-to-call ratio of 0.76 indicated a slightly bearish sentiment.
The "Max Pain" Theory
The "max pain" theory suggests that the price of an asset tends to gravitate towards the strike price where the most options contracts will expire worthless. This level, known as the "max pain point," can act as a magnet, influencing price action as the expiry date approaches. For the September 26, 2025 expiry, the max pain level for Bitcoin was $111,000, significantly above the current price of $109,526, suggesting traders might try to push the price closer to this level. Ethereum's max pain price was at $3,700, higher than the market price of $4,018, signaling a higher probability of a price decrease for Ethereum.
Volatility and Market Maker Activity
Options expiry often leads to increased volatility as traders close positions, roll them over to future dates, or hedge their existing positions. Market makers, who provide liquidity in the options market, play a crucial role in this volatility. As expiry nears, they dynamically hedge their positions, which can "pin" the price near the strike prices with the largest open interest, potentially suppressing realized volatility. However, this suppression is often temporary, and a clearer directional move may occur in the 24-72 hours following the expiry.
Macroeconomic Factors and Institutional Influence
The impact of options expiry can be further amplified by macroeconomic conditions and the involvement of institutional investors. Uncertainty surrounding central bank policies, shifting liquidity conditions, and events like potential U.S. government shutdowns can add layers of complexity. Institutional investors often use options to hedge their positions, and their activity can significantly influence market dynamics.
Recent Examples and Market Outlook
The $21 billion Bitcoin and Ethereum options expiry on September 26, 2025, served as a significant stress test for the crypto market. Bitcoin was trading near $109,350, dipping below $110,000 for the first time in six weeks, signaling potential for further corrections. Some analysts suggested that a failure to hold above $107,000 could lead to a decline towards $101,000, while holding above this level could open the door for a recovery towards $112,000.
While options expiry can induce short-term volatility and price swings, some analysts view pullbacks as healthy corrections within a broader bullish trend. Long-term sentiment remains optimistic, supported by institutional buying and optimistic year-end call option positioning.
