On Friday, 26.12, the deadline for Bitcoin options worth $26 billion expires. The fact that options worth ~$26 billion are expiring is not a catastrophe, but this event often increases short-term volatility and may 'pull' the price towards certain levels.
Let's break it down step by step.
What is actually happening during such an expiration?
Expiration is the moment when options either:
executed (if they are "in the money"), or
expire (if "out of the money").
Large volume means that:
a lot of hedges with market makers,
a lot of bets on specific price levels,
a lot of positions that need to be closed or rolled over.
Main risks and effects for the market
1. 🎯 "Magnet" to key levels (max pain)
Often the price moves towards the level where:
most options expire without profit for buyers,
it is most beneficial for market makers.
👉 It can look like strange movements without news: the market is "not allowed" above or below a certain price until Friday.
2. Increased volatility on the expiration day
Especially:
a few hours before expiration,
and immediately after it.
Reasons:
removal of hedges,
forced closure of positions,
sharp trades "at market."
Sometimes a sharp impulse occurs first, then — a pullback.
3. 🔄 Rollover of positions
Large players often:
close December options,
open January–March.
This can:
temporarily press on the price,
or conversely support it, if hedging is done through spot/futures.
4. ❌ This is NOT necessarily a crash
Important:
expiration itself does not mean a fall.
Historically:
sometimes the market falls,
sometimes it rises,
sometimes it just "chops" and moves out of the range after expiration.
Often the main movement begins on Monday when the options factor disappears.
What to watch for right now
Key strikes
Where is the maximum concentration of Calls and Puts?
Is there a strong skew in one direction?
Price relative to these levels
If the market is squeezed between strikes → a "flat with breakouts" is likely.
If the price has moved far away → a sharp return is possible.
Open interest after expiration
A sharp drop in OI = the market is "unloaded" → the movement may become cleaner.
Practical conclusion
What this threatens the market:
short-term sharp movements,
false breakouts,
increased noise.
What it does NOT threaten:
automatic crash,
long-term trend reversal only due to expiration.
