Bitcoin (BTC) markets are preparing for the expiration of $11.8 billion worth of options at the end of the year, scheduled for December 27 at 8:00 AM UTC. Recent data has revealed a strong advantage for call options, but bears could significantly reduce their losses by keeping the Bitcoin price below $75,000.
December 27 Total Bitcoin Options Open Interest. Source: Laevitas.ch
Total open interest in call options currently stands at $7.9 billion, while put options lag behind at $3.92 billion. This can be seen in Bitcoin rising 29% since October, rendering most put options worthless.
Options market leader Deribit holds a dominant market share of 74%, followed by the Chicago Mercantile Exchange (CME) and Binance at 10.3% each, more than double OKX’s 4.3% share.
Bulls and bears are incentivized to influence the Bitcoin spot price, and as the expiration date approaches, the potential outcome depends on the imbalance of options at various strike prices.
December Bitcoin Options Expiration Could Trigger BTC Price Spike
President-elect Donald Trump’s recent victory has certainly boosted investor confidence. Especially considering his campaign promise to “fire” U.S. Securities and Exchange Commission Chairman Gary Gensler “on day one” and the unprecedented number of cryptocurrency-supporting lawmakers who won elections in the United States. House and Senate.
The president, who supports Bitcoin mining, could lower regulatory barriers, potentially hastening the approval of “strategic Bitcoin reserves” and directing law enforcement agencies to hold BTC seized for criminal activity rather than liquidate it. Senator Cynthia Lummis’ bill aims to accumulate up to 1 million bitcoins over time.
Total open interest stands at $11.8 billion for the December options expiration, but the recent rally above $80,000 caught bearish investors off guard and reduced the final amount.
If the Bitcoin price stays near $88,000 at 8:00 AM UTC on December 27, only $96 million of put options will remain in effect. This limited exposure occurs because the option to sell at $85,000 becomes meaningless if BTC trades above that level at expiration.
relevant: Bitcoin reaches $85,000, breaks record of $82,400, ‘uncharted territory’
Bitcoin bears are targeting below $75,000 to minimize losses.
Five possible scenarios are outlined below based on current price trends. The imbalance on both sides represents a theoretical benefit. These estimates do not account for complex strategies, but there is no simple way to measure their impact.
- $72,000 to $75,000: $1.4 billion in call options and $470 million in put options. The net result is $930 million more favorable to the call product.
- $75,000 to $80,000: $1.85 billion in calls and $270 million in puts, with calls favored by $1.58 billion.
- $80,000 to $85,000: $2.74 billion in call options versus $130 million in put options. The currency preference is $2.61 billion.
- $85,000 to $90,000: $3.38 billion in calls and $96 million in puts, with $3.28 billion in calls favored.
- $90,000 to $100,000: $4.45 billion in calls favored, with $4.52 billion in calls and $74 million in puts.
Bears should push prices lower, targeting around $74,500 to avoid a major setback at year-end expiration. Conversely, bulls can maximize their profits by driving BTC to $90,500 by December 27th. Overall, current options market data indicates that Bitcoin will maintain its bullish momentum until early 2025.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.