The Bitcoin market is gearing up for a significant event on December 27th at 8:00 am UTC, with an estimated $11.8 billion in options set to expire. Recent data suggests that call (buy) options have the upper hand, but bears could mitigate their losses by keeping Bitcoin’s price below $75,000.
Aggregate Bitcoin Options Open Interest for Dec. 27
As of now, the total open interest for call options stands at a substantial $7.9 billion, while put (sell) options trail behind at $3.92 billion. This disparity is largely due to Bitcoin’s impressive 29% price surge since October, which has rendered most put options worthless.
Options Market Share
Deribit, the leading options market platform, holds a commanding 74% market share, followed closely by the Chicago Mercantile Exchange (CME) and Binance, each with around 10.3%. OKX trails behind with a mere 4.3% market share.
The Battle for Influence
Bulls and bears are now more incentivized than ever to influence Bitcoin’s spot price as the expiry date draws near. The outcome will largely depend on the imbalance of options at various strike prices.
December Bitcoin Options Expiry: A Catalyst for a BTC Price Surge?
The recent victory of President-elect Donald Trump has undoubtedly boosted investor confidence, particularly given his campaign promises to "fire" US Securities and Exchange Commission Chair Gary Gensler on "day one." Additionally, an unprecedented number of pro-crypto lawmakers won their elections in the House and Senate.
A pro-Bitcoin mining president could potentially reduce regulatory barriers, paving the way for a "strategic Bitcoin reserve" and directing law enforcement agencies to hold, rather than liquidate, BTC seized from criminal activities. Legislation by Senator Cynthia Lummis seeks to amass up to 1 million Bitcoin over time.
December’s Options Expiry: A Limited Exposure
As of now, aggregate open interest stands at $11.8 billion, although the recent rally above $80,000 has caught bearish investors off guard, reducing the final amount. If Bitcoin’s price remains near $88,000 at 8:00 am UTC on Dec. 27, only $96 million of put (sell) options will be in play.
This limited exposure arises because the option to sell at $85,000 becomes irrelevant if BTC is trading above that level at expiry. As a result, bears will need to push for a price drop to avoid a major setback in the year-end expiry.
Five Probable Scenarios Based on Current Price Trend
Outlined below are five probable scenarios based on the current price trend:
Between $72,000 and $75,000
- $1.4 billion in calls vs. $470 million in puts
- The net result favors call (buy) instruments by $930 million
Between $75,000 and $80,000
- $1.85 billion calls vs. $270 million puts
- Favors calls by $1.58 billion
Between $80,000 and $85,000
- $2.74 billion calls vs. $130 million puts
- Favors calls by $2.61 billion
Between $85,000 and $90,000
- $3.38 billion calls vs. $96 million puts
- Favors calls by $3.28 billion
Between $90,000 and $100,000
- $4.52 billion calls vs. $74 million puts
- Favors calls by $4.45 billion
Bears’ Best Bet: Targeting a Price Drop
To avoid a major setback in the year-end expiry, bears must push for a price drop, targeting around $74,500. Conversely, bulls could maximize their gains by pushing BTC to $90,500 by Dec. 27.
The Road Ahead
The current options market data points to sustained bullish momentum for Bitcoin into early 2025. As we approach the expiry date, investors will need to closely monitor price fluctuations and make informed decisions accordingly. Stay tuned for further updates on this developing story.
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