Key takeaways:
$30.3 billion in Bitcoin options will expire at year-end, with most call (buy) bets placed well above the $89,000 to $94,000 price range.
Bearish strategies stay favored unless BTC breaks $94,000 as prices above $88,000 have erased over half of put (sell) option bets.
As the year-end Bitcoin (BTC) options expiry approaches, bulls are increasingly skeptical about a turnaround in BTC price. A total of $30.3 billion in open interest hinges on Bitcoin’s 8:00 am UTC price on Friday, which will determine whether bears remain in control after a five-week consolidation near $89,000.
Dec. 26 BTC call options open interest at Deribit, BTC. Source: Deribit
Deribit holds 80% of aggregate open interest, followed by the Chicago-based CME with 11%. However, most of the $21.7 billion in call (buy) options are set to expire worthless on Friday, as bulls were caught off guard after Bitcoin lost the $100,000 psychological support level in November. Less than 6% of Deribit’s call options are positioned at $92,000 or lower at expiry.
Even excluding the $2.5 billion in open interest at strike prices of $150,000 or higher, data shows a heavy concentration from $100,000 to $125,000. Traders often use highly optimistic strike prices to collect volatility premium through covered call strategies, which explains the strong demand for levels as high as $200,000.
Still, while bulls may have underestimated how long it would take Bitcoin to reclaim $94,000, bearish strategies may have gone too far by clustering bets from $75,000 to $86,000. If Bitcoin trades above $88,000 on Friday, more than 50% of the $7.7 billion in put options on Deribit will expire worthless. Even so, bearish positioning remains favorable as long as BTC stays below $94,000.
Dec. 26 BTC put options open interest at Deribit, BTC. Source: Deribit
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