Key Points
- Bitcoin is nearing a significant deadline with the expiration of $11.8 billion in options on December 27, 2024.
- The cryptocurrency’s future price trajectory could be influenced by this event, with traders preparing for increased volatility.
Bitcoin’s Upcoming Options Expiry
Bitcoin is on the brink of a crucial deadline that could trigger considerable market shifts. The expiration of $11.8 billion worth of Bitcoin options on December 27, 2024, has traders bracing for heightened volatility. This expiration includes both call and put options, which could potentially impact Bitcoin’s price path in the closing days of 2024.
Following the 2024 US elections, the cryptocurrency has seen a rise in bullish sentiment. Some market analysts are predicting a surge to $100,000, driven by increasing capital inflows and a market dominance exceeding 60%. However, reaching this milestone could be challenging, particularly with billions in options contracts due to expire.
The growing interest in Bitcoin is evident in the options market’s recent surge of open interest, which has hit an all-time high of $50 billion. Yet, much of this optimism is dependent on Bitcoin’s performance in the coming weeks, especially with the looming expiration of $11.8 billion worth of options contracts.
Bitcoin Price and Market Movements
Bitcoin’s current price, slightly above $90,000, reflects a balance of bullish and bearish forces. Over the past 24 hours, price corrections have surfaced, indicating that the market’s upward momentum may not sustain. The options market will play a pivotal role in determining Bitcoin’s short-term price trajectory.
Out of the $11.8 billion in call-and-put options set to expire, call options dominate, accounting for nearly 70% of the total order book, as per Coinglass data. Investors are hopeful about Bitcoin reaching the $100,000 mark. If this target is achieved, a wave of call options would likely be exercised, creating significant selling pressure as traders secure profits.
However, this might not be the end of the market’s movements. The expiration of these options could trigger a short-term pullback. Traders holding call options might inundate the market with sales as they close their positions. If put options — bets on a price drop — start to outnumber calls, market sentiment could shift, amplifying downward pressure.
Bitcoin Options Market Concentration
In terms of market share, the Bitcoin options market exhibits high concentration, with the majority of trading occurring on Deribit, which holds a 74% market share. CME and Binance account for approximately 10.3% each. The focus on Deribit underscores the primary arena for Bitcoin price movement bets.
Bitcoin options are in a precarious situation. Strong bullish sentiment has many traders expecting a breakout above $100,000. However, the expiration of these contracts might initiate a self-fulfilling cycle of selling pressure if prices do not remain above $100,000. The behavior of these contracts will be crucial for Bitcoin to maintain or exceed this value.
