Bitcoin’s $14.27B Options Expiry is Due Dec. 27 — Will BTC Price Break Above $100K?

Bitcoin (BTC) investors are preparing for a high-stakes options expiry worth $14.27 billion, set to occur on Dec. 27 at 8:00 a.m. UTC. The cryptocurrency’s recent drop below the $100,000 milestone has blindsided bullish traders, opening the door for bearish market participants to seize control and potentially accelerate a price correction as January 2025 approaches.

Data from Deribit, which commands 72% of the Bitcoin options market, reveals that call (buy) options account for $8.45 billion in open interest, compared to $5.82 billion for put (sell) options.

Bitcoin’s impressive 50% rally over the past quarter has rendered a significant portion of put options nearly worthless, reducing their influence on the market dynamics.

As the expiry nears, traders are closely watching whether Bitcoin’s price can regain upward momentum or if bearish forces will capitalize on the recent dip to steer the market lower in the coming weeks.

What Can Happen When Bitcoin Options Expire on Dec. 27?

Bitcoin trades above $95,000 just a day before a major options expiry. Meanwhile, most calls are opened at around the $90,000 strike price. This strike holds the highest open interest in call options, signaling that traders were bullish on Bitcoin and expected it to surpass this level.

With the cryptocurrency comfortably above the $90,000 threshold, these options are now “in the money,” giving holders the right to buy Bitcoin at a discount relative to the current market price.

In other words, the significant open interest at the $90,000 level suggests that many traders placed bets on a rally past it, and their expectations have been realized. As a result, profit-taking may now come into play, with some opting to exercise their options to secure gains.

At the same time, market makers who sold these calls could be forced to cover their exposure by buying Bitcoin in the spot or futures markets, potentially adding upward pressure on the price in the short term.

With large positions being adjusted or closed, traders may see temporary price fluctuations around the $95,000 level as profit-taking and hedging activities unfold. The previously identified “max pain” price of $85,000, where most options would expire worthless, is now less relevant as Bitcoin’s current price has significantly exceeded that mark.

All eyes remain on whether Bitcoin can maintain its rally or consolidate around the $95,000 level. While the immediate price action may be choppier, the strong bullish sentiment indicated by the $90,000 strike could pave the way for continued optimism in the broader market.

What Happens If Bitcoin Drops Below $90,000 Strike Price?

The $90,000 call options currently have the highest open interest and would move “out of the money” if Bitcoin trades below this level. This means these options would lose their value, leaving traders who bet on Bitcoin staying above $90,000 at a loss.

With prices below $90,000, traders holding these options might avoid exercising them, potentially reducing the buying pressure that would have come from market makers hedging their positions.

Meanwhile, a drop below $90,000 will benefit traders holding put options, which allow them to sell Bitcoin at a higher strike price. These options would become “in the money,” encouraging bearish traders to exercise their positions. This could increase selling pressure, amplifying Bitcoin’s downward momentum.

Bitcoin Chart Shows Failed Rising Wedge Breakout

Bitcoin recently staged a breakout from a falling wedge pattern, a bullish technical formation that typically signals a potential price recovery. The breakout occurred after Bitcoin’s price consolidated between converging trendlines, eventually breaching the upper boundary with strong momentum.

However, the price shows weakening breakout momentum, with it returning below key support levels defined by the 200-period exponential moving average (200-day EMA; the blue wave) near $96,400 and the 50-period EMA (the red wave) at around $97,830 serves as immediate resistance.

Bitcoin needs to reclaim them to sustain its upward trajectory. Otherwise, its risks of declining toward $90,000 appear high.