Friday's $10.8 Billion Bitcoin Options Expiration: Can Bulls Push Toward $95K?
Data from Bitcoin options markets indicates bears currently have the upper hand heading into Friday's $10.8 billion expiration event, though a bullish breakout beyond $90,000 before expiry could shift the balance.
Key takeaways:
- Bears hold a strategic advantage through options positioning unless Bitcoin achieves a convincing move above the 90,000 price threshold.
- Market participants are deploying $100,000 call (buy) contracts primarily for generating income instead of speculating on a substantial Bitcoin price surge.
Over the last two months, Bitcoin (BTC) has demonstrated resilience by bouncing back from the $87,000 support level on several occasions, yet market participants continue to express doubt regarding a sustained rally past $95,000. The approaching $10.8 billion BTC options expiration scheduled for Friday marks a critical juncture for bullish traders, particularly considering that call (buy) options constitute the majority of outstanding market positions.
The combined $6.6 billion in open interest from call options stands 57% above the $4.2 billion recorded in put (sell) contracts; nevertheless, this imbalance doesn't automatically indicate bullish dominance. Consistent with previous patterns, Deribit commands a substantial lead among trading platforms with 78.7% of total market share, while OKX captures 6.3%. The Chicago Mercantile Exchange (CME) occupies the third position with a 5% market share.
Fewer than 17% of call options interest scheduled to expire on Jan. 30 at Deribit features strike prices beneath $92,500. Additionally, considering Bitcoin's two-month price floor stood at $84,000, call options positioned at $70,000 and below are most likely being employed within sophisticated onchain trading strategies rather than representing straightforward bullish price predictions. Acquiring a call option positioned 20% under prevailing market rates proves prohibitively costly for the majority of individual traders.
To illustrate, a BTC call option with a $70,000 strike price expiring Feb. 27 presently costs 0.212 BTC, substantially exceeding an $80,000 call option priced at 0.109 BTC. This pricing differential clarifies why bullish traders generally gravitate toward options positioned at or marginally above current spot market levels. On the flip side, BTC call options with strikes at $110,000 or above are frequently dismissed, given their expense remains below 0.002 BTC (approximately $180).
Bitcoin options positions favor bears beneath $90,000
A considerable proportion of call options at $100,000 and above can be traced to covered call methodologies. Under this arrangement, the option seller collects an immediate premium, comparable to interest earned from fixed-income securities. This approach diverges from traditional bond products since the seller maintains ownership of the underlying Bitcoin, despite having limited upside profit potential. As such, these positions are seldom interpreted as purely optimistic market signals.
At Deribit, call options with strike prices ranging from $75,000 to $92,000 represent $850 million in total value. To assess whether bulls hold a favorable position ahead of Friday's expiration, analysts must examine the distribution of put options and evaluate whether they serve as downside hedges or components of neutral trading approaches. A key metric involves measuring the concentration of put options below $70,000, where premiums remain under $300.
Although put contracts show lower overall representation compared to call options, put instruments positioned between $86,000 and $100,000 account for $1.2 billion at Deribit. Consequently, even when assuming puts at $102,000 and higher receive no advantage from downward price movement, bearish trading strategies seem more favorably positioned heading into the January expiration event.
The following three scenarios represent likely outcomes for Friday's BTC options expiry at Deribit according to prevailing price patterns:
- Between $86,000 and $88,000: The net result favors the put (sell) instruments by $775 million.
- Between $88,001 and $90,000: The net result favors the put (sell) instruments by $325 million.
- Between $90,001 and $92,000: The net result favors the call (buy) instruments by $220 million.
Provided that the Bitcoin price stays beneath the $90,000 threshold, the quantitative edge remains with bearish options positioning.