The cryptocurrency market will witness the first Bitcoin options expiry of the year, with approximately 20,000 contracts expiring, totaling a notional value of $1.93 billion. While this amount is far less than the massive expiry events that occurred at the end of 2024, the event still draws significant attention, especially considering the current sideways movement in Bitcoin’s price.

Bitcoin has been trading within a relatively narrow range for the past two weeks, which has left many traders and analysts wondering how the market will react when these options expire. The impact of options expiry events on the price of Bitcoin is always a subject of debate, and this event will provide insights into the resilience of the market as it enters the new year.

Impact of Bitcoin Options Expiry

While this week’s expiry is nowhere near as large as the end-of-year expiry event that saw billions in contracts close, there are still considerable positions open. Of the $1.93 billion in expiring Bitcoin options, a substantial portion is tied to higher strike prices, with a particular focus on the $120,000 and $110,000 levels. According to Deribit, open interest (OI) at the $120,000 strike price alone accounts for approximately $1.4 billion, followed closely by $1.3 billion at the $110,000 strike. This indicates that many market participants are positioning themselves for a potential rally, suggesting bullish sentiment despite the lack of major movement in Bitcoin’s price recently.

The Role of the Put/Call Ratio

The put/call ratio of 0.68 this week indicates that more call options (betting on a price increase) are set to expire than put options (betting on a price decrease). This could signal a relatively positive outlook for Bitcoin’s price as the expiry approaches. In general, a higher number of call options suggests that traders expect upward momentum, and the dominance of calls in the options market adds another layer of optimism to the prevailing market sentiment.

Diverging Signals from the Market

Despite the optimistic outlook in the options market, there are mixed signals coming from the derivatives space. According to reports from Deribit, short-term volatility for Bitcoin is leaning slightly toward out-of-the-money (OTM) puts, suggesting some cautious sentiment around the immediate future of the market. Meanwhile, longer-term options have seen an increase in bullish sentiment, reinforcing the notion that traders remain confident about Bitcoin’s price in the coming months.

The performance of Bitcoin and other cryptocurrencies during this period will depend on how the options expiry event affects market dynamics. If the expiry leads to volatility and liquidation of positions, Bitcoin’s price may face a brief correction. However, if the expiry passes without major disruption, Bitcoin could resume its upward trajectory.

Ethereum Options Expiry

Adding to the excitement, around 205,000 Ethereum options contracts are also expiring today, valued at approximately $710 million. Ethereum has been in a stronger bullish trend compared to Bitcoin in recent weeks, and many analysts believe it will continue to perform well in the first quarter of 2025. Like Bitcoin, Ethereum’s options expiry is set to influence its price, though Ethereum’s expiry is on a smaller scale compared to Bitcoin’s.

The combined value of the options expiring across both Bitcoin and Ethereum amounts to approximately $2.6 billion, highlighting the significance of today’s events in the broader crypto market.

Bitcoin and Ethereum Market Outlook

While the options expiry event draws attention, it’s important to consider the broader market outlook. Since the start of 2025, approximately $160 billion has flowed into the cryptocurrency market, pushing the total market capitalization to $3.56 trillion. Both Bitcoin and Ethereum have shown signs of resilience, with Bitcoin climbing 1.7% over the past 24 hours to approach the $97,000 level. However, Bitcoin remains range-bound and needs to clear the psychological $100,000 resistance level to maintain momentum.

Ethereum, on the other hand, has performed better recently, gaining 2% to edge closer to the $3,500 price point. Analysts suggest that Ethereum could test the $3,600 resistance in the short term, which, if breached, could trigger further upside movement. With Ethereum’s positive momentum and Bitcoin’s sideways trading, it seems the market is preparing for either a breakout or a consolidation phase.

Will the Market Continue to Climb?

Bitcoin’s ability to break the $100,000 resistance is crucial for further gains. If this level is successfully overcome, it could pave the way for a substantial rally toward higher targets. However, if the expiry event leads to excessive volatility or liquidation, Bitcoin could face a temporary setback.

The options expiry, along with increasing bullish sentiment and new capital inflows, suggests that the crypto market could see more favorable conditions in the coming days and weeks. As always, crypto traders should remain cautious, as market sentiment can change rapidly.

Conclusion

As $2 billion worth of Bitcoin options contracts expire today, the market awaits to see how the asset reacts. With bullish signals from the options and derivatives markets, it’s possible that Bitcoin could see a resurgence in price once these contracts are settled. However, the expiry event is only one factor in a much larger landscape of market influences, including global economic conditions, market liquidity, and investor sentiment. While short-term volatility is possible, the overall outlook for Bitcoin and Ethereum remains optimistic as the crypto market enters 2025.