Nearly $18bn in Bitcoin and Ethereum options are due to expire on Friday, an event that could alter dealer hedging activity and bring greater short-term volatility to cryptocurrency markets.
The Bitcoin contracts account for about $16bn of the total quarterly settlement. The expiry could remove an important source of buying pressure that has helped support Bitcoin’s recent rise, potentially leaving the market more exposed to fresh price swings once the contracts have been settled.
More than half of the $9.4bn notional value represented by Bitcoin call options is currently in the money. By contrast, almost all of the put options are underwater.
That imbalance has left the expiry with a heavily call-focused structure. Call options give holders the right to buy Bitcoin at a specified price, while puts provide the right to sell. The position of those contracts can influence how dealers hedge their exposure as the market moves.
Bitcoin’s advance through the $80,000 to $87,000 range may have been amplified by that hedging activity. As call options moved further into the money, dealers may have needed to buy more of the underlying asset, creating an additional source of demand.
That support could weaken after Friday’s settlement, when the contracts cease to exist. The removal of those positions may change the flow of buying and selling in the market, although the immediate effect will depend on how traders adjust their exposure.
The expiry covers both Bitcoin and Ethereum options, but the Bitcoin contracts are the main focus because of their larger notional value and the pronounced difference between calls and puts. The size of the settlement means it has the potential to reshape short-term market conditions beyond the individual contracts themselves.
Bitcoin was listed at $85,272.78, up 1.12%, while Ethereum stood at $2,738.19, a rise of 0.41%.
The expiry comes after Bitcoin’s move higher across the $80,000-$87,000 area, raising the possibility that some of the buying seen during that advance was linked to dealer hedging rather than purely new market demand. If that flow fades following settlement, the cryptocurrency could face a different trading environment.
The key question for the market is whether Bitcoin can maintain its recent levels once the call-heavy options positioning has run its course. A reduction in hedging-related buying would not determine the direction of the market by itself, but it could remove one factor that has supported the rally and leave short-term volatility more visible.
