On December 26th, the cryptocurrency market will witness the largest Bitcoin options expiration ever recorded in terms of notional value.
The trading day leading up to this event is expected to be uneventful and volatile within a narrow range, as major financial institutions manipulate prices to remain stable and maximize gains from expiring contracts.
However, once this significant expiration concludes and January begins, Bitcoin could experience a sharp upward surge—provided no negative news impacts the leading digital asset.
Enormous Options Expiry
Approximately $23.7 billion worth of Bitcoin options are set to expire. When combined with Ethereum (ETH) and other cryptocurrencies, total expirations reach around $28 billion.
Options are financial instruments granting traders the right—but not obligation—to buy (calls) or sell (puts) Bitcoin at predetermined prices before a specified date. Upon expiry, these contracts must be settled accordingly.
This colossal $28 billion expiry means vast sums of capital are locked into these positions. Consequently, market participants must hedge their exposure carefully to prevent losses.
Market makers typically write (sell) these options that retail investors purchase. Their profits peak when options expire worthless; hence they aim for price levels where most contracts lose value—known as the “max pain” point.
To maintain neutrality in their books, market makers buy Bitcoin when its price falls and sell when it rises. This strategy helps them manage risk effectively.
This continuous cycle of buying low and selling high by market makers exerts downward pressure on price movements, keeping Bitcoin confined within tight ranges during such periods.
The “Uncoiling Spring” Effect
Once option expirations conclude—typically at 8:00 AM UTC on Fridays—the need for hedging diminishes significantly for market makers. The suppressive force restraining price action is lifted, often resulting in renewed volatility afterward.
A brief dip might occur just before an upward breakout as algorithms attempt to capture liquidity by pushing prices lower temporarily to trigger stop-loss orders from cautious traders seeking protection against further declines.
Historically speaking, January tends to attract fresh capital inflows into cryptocurrencies like Bitcoin—a bullish signal for upcoming months ahead.
A substantial decline remains unlikely since option expiries generally exert neutral-to-positive influence on pricing trends during this timeframe.
Nevertheless, thinly traded markets can be vulnerable to manipulation because relatively small orders may cause outsized moves due to limited buyers or sellers available at certain levels.