- Around $23 billion of Bitcoin options expire this Friday, which is well over half of Deribit’s open interest, increasing volatility risks.
- Thirty-day implied volatility reformed at about 45%, while -5 skew showed heavy demand for downside protection.
- The heavy $1.4 billion put interest around $85,000 could attract spot prices towards expiry.
Bitcoin is entering the final weeks of 2025 under mounting pressure, as options markets signal heightened instability. Roughly $23 billion in Bitcoin options are set to expire next Friday, sufficient to make the markets volatile for crypto users around the world.
These expiring options account for more than half of the open interest on the derivatives platform, Deribit, which is the largest Bitcoin options market. Such a heavy buildup increases the likelihood of abrupt moves, particularly as traders crowd into hedges, positioning for downside risk while liquidity conditions remain uneven across the broader digital asset market globally.
According to a recent post by Wu Blockchain, thirty-day implied volatility has moved up to levels around 45 percent, showing the increased demand for protection. Skew levels close to negative five percent also emphasize the bearish trend, as the cost for downside protection continues to rise before the expiry date next week.
Bitcoin Price Swings Intensify as Expiry Nears
Bitcoin recorded intraday swings exceeding $130 billion during US trading, triggering cascading liquidations on both sides. Although there was an increase of over four percent to $89,430, this was not sustained, and currently, Bitcoin is down 30% from its record high in October.
Notably, bears remain dominant in overall positioning, with call options at $100,000 and $120,000. On the other hand, put options at $85,000 have substantial exposure with around $1.4 billion open interest, which may attract spot market prices towards that level due to accelerated hedging flows observed during the current week.
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Fragile Sentiment Clouds Early 2026 Outlook
However, aside from the expiry dynamics, market participants are also bracing for more catalysts to influence the positioning for the early part of 2026. Hedging before the January 15th MSCI review and call overwriting are expected to contribute to the more adverse volatility on the downside than on the upside.
The sentiment is still delicate, with Bitcoin undergoing the worst performance in a quarter since mid-2022. Moreover, a failure to reverse crucial technical levels has led to a holding pattern. Despite this, with sustained high levels of volatility and a defensive position, researchers assert that scenarios for advances lie ahead to kick off the year.
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