The cryptocurrency market is set to face a major event, with $9.4 billion worth of Bitcoin options and $1.3 billion worth of Ethereum options set to expire. This event could trigger significant volatility in the market, especially after the U.S. Thanksgiving holiday, leaving traders and investors on edge. With nearly half of all Bitcoin options currently “in the money” (ITM), and the price of Bitcoin nearing critical levels, the stage is set for dramatic price swings in the coming days.

What’s at Stake for Bitcoin?

As of November 29, around $4.2 billion worth of Bitcoin options are in the money, representing a large portion of the total options market. These ITM options mostly consist of call options, with traders betting that Bitcoin’s price will continue its upward trajectory. The big question is whether Bitcoin will be able to maintain its current momentum leading up to the expiry date, or whether traders will capitalize on the profits and push prices down in the process.

Historically, Bitcoin has seen price volatility around major options expirations. In October 2024, for example, Bitcoin experienced a 3% drop due to the expiry of a large amount of options. While this event could lead to similar short-term dips, the larger question remains whether the massive number of call options will result in a rally or whether profit-taking will dominate the market.

The Role of “Max Pain” and Market Sentiment

A key factor in the potential market movements is the concept of “max pain,” which refers to the price level at which the largest number of options contracts will expire worthless, causing maximum financial loss for option holders. Currently, the max pain level for Bitcoin is between $70,000 and $82,000. If Bitcoin’s price stays within this range as the options expiration date approaches, it could minimize volatility and lead to less aggressive price swings.

However, there is a significant amount of out-of-the-money (OTM) Bitcoin options—approximately $5.2 billion. While these options are primarily puts, which act as insurance against a downturn, they still reflect a degree of caution in the market. Interestingly, these OTM puts are not necessarily bets on Bitcoin’s price falling, but rather hedges against potential downside. If Bitcoin remains comfortably above the max pain level, market makers may need to buy additional Bitcoin to cover their positions, potentially pushing the price higher and propelling Bitcoin toward the $100,000 mark.

What Could Bitcoin’s Price Action Look Like?

With the expiration of such a large number of options contracts, Bitcoin’s price could experience significant volatility as traders adjust their positions. There are two potential outcomes:

1. Bullish Push: If the market makers need to buy Bitcoin to cover their positions, the price could see a sharp increase. This could push Bitcoin closer to its next resistance level, which is the psychological $100,000 mark. If this occurs, the expiration of options could become a catalyst for further upward movement in the price.
2. Bearish Pullback: On the flip side, traders may lock in profits by selling their Bitcoin, leading to a short-term price dip. The pressure from the large number of ITM call options could lead to some profit-taking as these positions are closed out. If Bitcoin fails to hold above key support levels, we could see a correction as the expiration date approaches.

Ethereum’s Role in the Market

While Bitcoin options are the primary focus, Ethereum is also facing a significant expiration event with $1.3 billion in options contracts set to expire on the same day. Similar to Bitcoin, Ethereum’s market could also experience heightened volatility as traders adjust their positions. The potential for a price surge in Ethereum is similarly tied to the broader market dynamics, with some analysts predicting that Ethereum could follow Bitcoin’s lead and see a boost in price if Bitcoin breaks higher.

What’s Next for the Market?

As November 29 draws closer, all eyes will be on the price action of Bitcoin and Ethereum. The outcome of this massive options expiry event could set the tone for the next phase in the market, either propelling prices higher or triggering a correction. Traders will need to keep an eye on the levels of open interest, particularly in Bitcoin, as the expiry approaches.

The key factors that could influence the outcome include the broader sentiment around Bitcoin’s ongoing rally, market makers’ actions to cover their positions, and the potential for profit-taking. While it’s impossible to predict with certainty what will happen, the massive scale of these options expirations ensures that the market will be in for a bumpy ride. For now, traders will have to remain vigilant and prepared for the inevitable volatility that comes with such a large financial event.

As the days pass and we approach the expiration date, the impact of the $9.4 billion worth of Bitcoin options on the price of Bitcoin remains to be seen. Whether Bitcoin continues its ascent toward $100,000 or faces a short-term correction, this expiry event will certainly be a major catalyst for the market in the near term.