Bitcoin Swings Intensify Ahead of $23 Billion Options Expiry

Bitcoin is heading into the final stretch of 2025 under mounting strain, according to signals from the options market. Roughly $23 billion worth of Bitcoin options are set to expire next Friday, a concentration large enough to intensify volatility that is already running hot across crypto markets.

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That pending expiration represents more than half of the total open interest on Deribit, the world’s largest venue for Bitcoin options trading. The sheer size of those contracts underscores how traders are bracing for continued downside risk in an environment that has grown increasingly unstable.

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On Wednesday alone, Bitcoin experienced price swings exceeding $130 billion in notional value within a single hour of US trading, sparking a wave of liquidations on both bullish and bearish positions.

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Meanwhile, the total crypto market capitalization has been seesawing around the $3 trillion mark.

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“Markets continue to weaken as we approach the New Year, with prices balanced precariously,” said Nick Forster, founder of digital-asset trading platform Derive.xyz. His comments reflect a broader sense of caution as traders weigh heavy positioning against thinning liquidity toward year-end.

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Bitcoin briefly attempted a rebound on Thursday, climbing as much as 4% to around $89,430, before giving back those gains. Despite intermittent bounces, the world’s largest cryptocurrency remains roughly 30% below its early-October record high of more than $126,000, highlighting how sharply sentiment has shifted over the past two months.

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Options data suggests that pessimism is still firmly in control. According to Forster, Bitcoin positioning remains “decisively bearish,” with 30-day implied volatility rising back toward 45%. At the same time, skew a measure comparing the cost of downside protection to upside exposure sits near minus 5%.

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That negative skew indicates traders are willing to pay more for protection against losses than for bets on a rally. Longer-dated skew remains similarly depressed, signaling expectations for continued pressure well into the first half of 2026 as selling from previously dormant wallets weighs on spot prices.

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The structure of positions around the Dec. 26 options expiry reinforces that divide. On the optimistic side, call options are concentrated at strike prices of $100,000 and $120,000, suggesting some traders are still holding out hope for a late-year rebound.

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However, bearish positioning dominates the near-term outlook. A large buildup of put options has formed around the $85,000 level an area that STS Digital estimates carries roughly $1.4 billion in open interest. That concentration could act as a gravitational pull on prices as expiration approaches, drawing Bitcoin closer to that level.

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Looking beyond the immediate expiry, traders are preparing to reposition around two key developments. One is hedging activity ahead of a Jan. 15 decision by MSCI, which could remove digital-asset treasury companies from its indexes if crypto holdings exceed 50% of total assets. The other is a resurgence of call-overwriting strategies, where investors sell upside exposure to generate income in choppy markets.

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“Combined, these flows are likely to add to downside volatility while limiting upside potential,” said Maxime Seiler, chief executive of digital-asset trading firm STS Digital. His assessment points to a market that may struggle to sustain rallies even if buyers step in.

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Overall sentiment remains fragile. With Bitcoin down roughly 23% for the quarter, it is on track for its worst quarterly performance since the second quarter of 2022 a period marked by the collapse of TerraUSD and the failure of hedge fund Three Arrows Capital. Those events sent shockwaves through the crypto ecosystem, and comparisons to that era are doing little to bolster confidence.

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Timothy Misir of BRN noted that Bitcoin’s failure to reclaim key technical levels has left the market stuck in what he described as a “fragile holding pattern.” Without a clear catalyst to restore confidence, traders appear reluctant to take aggressive directional bets.

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Still, not all optimism has disappeared. While volatility remains elevated and positioning largely defensive, upside scenarios have not been completely abandoned. “Markets are bracing for a volatile start to the year,” Forster said, adding that traders continue to keep some exposure to potential rebounds even as they prioritize protection.

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As Bitcoin heads toward year-end, the combination of massive options expirations, thin liquidity, and unresolved macro and crypto-specific risks suggests turbulence may remain a defining feature of the weeks ahead. For investors, the options market is sending a clear message: caution is still the dominant theme, and sharp moves in either direction remain firmly on the table.