$14 Billion Bitcoin and $3.84 Billion Ethereum Options Set to Expire Tomorrow, Potentially Sparking Market Volatility

Tomorrow, a significant event is set to unfold in the cryptocurrency market as Bitcoin (BTC) and Ethereum (ETH) options worth billions of dollars are scheduled to expire. With BTC trading above $96,000 and ETH above $3,300, the expiration of these options—particularly on the Deribit exchange—could trigger notable volatility in the markets.

Record Bitcoin and Ethereum Options Expiry

At 08:00 (UTC) on December 27, a massive expiry event will take place on Deribit, the world’s leading crypto options exchange. Around 146,000 BTC options contracts worth approximately $14 billion will expire, marking the largest options expiry in Deribit’s history. This represents a staggering 44% of the total open interest for Bitcoin options across various maturities, further amplifying its potential market impact.

In addition to Bitcoin, Ethereum options worth about $3.84 billion will also expire tomorrow, adding to the significant event. Deribit accounts for more than 80% of the global crypto options market, making this expiry particularly noteworthy.

According to Luuk Strijers, CEO of Deribit, this massive options expiry will likely conclude a remarkable year for the bulls and could influence the direction of the market heading into 2025.

Market Uncertainty Ahead of Expiry

Despite the size of the options expiration, the market remains uncertain about potential price movements. High volatility of volatility (vol-of-vol)—a metric that measures fluctuations in the volatility of an asset—suggests that there is no clear directional bias among investors. A high vol-of-vol indicates that the market is highly sensitive to news and economic data, which could cause rapid price swings and force investors to adjust their positions.

This uncertainty is reflected in the price action of both Bitcoin and Ethereum leading up to tomorrow’s expiry. BTC recently dipped to around $95,000, before recovering to above $96,000. Ethereum also experienced a drop earlier today, falling to $3,348, before quickly rebounding above $3,370.

Bitcoin’s Price Action and Market Sentiment

As of the latest data, Bitcoin is trading above $96,000, after briefly touching $95,700 earlier today. Over the past 24 hours, Bitcoin experienced $65 million in liquidations, with the bulk of those being long positions ($48.1 million) and a smaller amount in shorts ($17.4 million), according to CoinGlass data.

Bitcoin’s price recently approached $100,000 on the back of significant news, including MicroStrategy’s announcement to issue $10 billion in shares, which could lead to over $3 trillion in potential Bitcoin investments in the future. Additionally, the market remains hopeful about potential changes in U.S. policy, as the upcoming Trump administration is expected to implement crypto-friendly regulations, alongside the announcement of a strategic Bitcoin reserve under the new president.

Given these factors, the market expects a bullish trajectory for Bitcoin, especially as we move into the new year. BTC could continue its upward momentum and possibly reach new all-time highs (ATHs) in 2025.

Ethereum’s Price Action and Market Outlook

Ethereum, while still trading above $3,300, has shown signs of weakness in comparison to Bitcoin. After briefly surpassing $3,500 earlier today, Ethereum’s price dropped to $3,348, before recovering to around $3,370. In the past 24 hours, $51 million worth of ETH positions were liquidated, with $39.5 million of that being long positions and $21.1 million in short positions.

Despite a bullish year for Bitcoin, Ethereum has struggled to replicate its success. The launch of Ethereum ETFs didn’t result in the same price surges seen with Bitcoin, and ETH has yet to reach its previous ATHs. Andrew Melville, a research analyst at Block Scholes, notes a more bearish outlook for ETH, pointing to a significant drop in the implied volume of call options, which suggests decreased demand for bullish bets on Ethereum.

However, the broader crypto market is expected to flourish in 2025, with increasing adoption likely to benefit Ethereum as well. Analysts predict that Bitcoin could hit $160,000 and surpass the 8% adoption threshold next year. With this in mind, Ethereum may see renewed growth as adoption continues to expand.

Conclusion

The expiration of $14 billion in Bitcoin options and $3.84 billion in Ethereum options tomorrow will undoubtedly have a significant impact on the crypto market. The volatility leading up to this event reflects investor uncertainty, but the long-term outlook for both Bitcoin and Ethereum remains positive. Bitcoin, in particular, is positioned for continued growth, while Ethereum could benefit from the broader market’s bullish trend in 2025. Investors should be prepared for potential market swings tomorrow, but the overall sentiment points to a strong start for the crypto market in the coming year.