Bitcoin Braces for $10.1 Billion Options Expiry

The Bitcoin market is gearing up for a significant event: the expiry of $10.1 billion in options

by Faruk Imamovic
Bitcoin Braces for $10.1 Billion Options Expiry
© Getty Images/Dan Kitwood

The Bitcoin market is gearing up for a significant event: the expiry of $10.1 billion in options. This event is drawing considerable attention from investors, as it could have a substantial impact on Bitcoin’s price. According to the latest data, call (buy) options currently hold an advantage.

However, bears could limit their losses if they manage to push Bitcoin’s price below $42,000. As the deadline looms, both bulls and bears have incentives to influence Bitcoin's spot price. The outcome of this tussle is likely to become clearer as the expiry price is established.

Deribit, the options market leader, has an impressive $7.7 billion in open interest. However, a surprising development is the Chicago Mercantile Exchange (CME) emerging as the runner-up with $1.38 billion in open interest, more than double that of OKX, which ranks third with $630 million.

Impact of Spot Bitcoin ETF Expectations

One factor giving bullish options an edge is the anticipated approval of a spot Bitcoin exchange-traded fund (ETF) in January. The Securities and Exchange Commission (SEC) has notably altered its approach towards ETF proposals.

Instead of outright rejections, the SEC is now actively engaging in dialogue with ETF creators, signaling a more open and positive stance towards potential ETF approval. This shift in approach by the SEC is likely influencing market dynamics, reducing the likelihood of bears successfully suppressing Bitcoin’s price below $40,000 before the year-end BTC options expiry.

Evolving Cryptocurrency Landscape

Another crucial development in the cryptocurrency world is Binance’s recent plea deal with the U.S. Department of Justice and regulators, indicating a move towards compliance and Anti-Money Laundering practices.

This shift towards integration into the mainstream financial ecosystem may further boost the prospects of a spot ETF approval. Possibility is reinforced by changes on the board of Grayscale Investments and its subsequent refiling of a request to convert the Grayscale GBTC Trust.

While the aggregate open interest for the December options expiry stands at a staggering $10.1 billion, the actual amount is expected to be less, as the recent rally above $40,000 took bearish investors by surprise.