Bitcoin options expiration #BTC is the moment when financial contracts for the purchase or sale of a digital asset expire. At first glance, such events seem to be a catalyst for sharp price movements. However, a deep analysis shows that this is not always the case. Let's take a closer look at why Bitcoin options expiration does not always lead to volatility, and also study its features, volumes, and impact on the market.

What are options and their expiration?

#Options are derivative financial instruments that give their owners the right, but not the obligation, to buy or sell an underlying asset (in this case, Bitcoin) at a pre-determined price (the strike price) before a specified date. These instruments are widely used by both speculators and institutional investors to manage risk.

  • A call option gives the right to buy an asset.

  • A put option gives the right to sell an asset.

Expiry is the moment when the option expires, after which the owners either exercise their right or lose the opportunity to do so. In the case of Bitcoin, expiration occurs monthly on major derivatives platforms such as CME, Deribit, and others.

Expiry scales and dates

Option expirations often involve significant volumes. For example:

  • July 5, 2024: Over $1.04 billion worth of options expired on Deribit, which included 18,339 contracts on #BTC .

  • September 29, 2024: Another expiration of over $1.35 billion, covering both call and put options.

  • December 22, 2023: Preliminary data suggests expiration could reach $2 billion due to increased interest in derivatives ahead of the holiday season.

Why is expiration considered important?

Investors and analysts watch expirations closely because they can reflect market sentiment and potentially impact prices. However, the impact of expirations is not always as significant as people think. Let's look at the main reasons why.

Factors that reduce the impact of expiration

  1. Growing market maturity
    The cryptocurrency market has become more mature and liquid, making it less susceptible to the influence of isolated events. For example, if a few years ago expirations caused sharp price movements, today the market is able to "digest" such events without significant fluctuations.

  2. Hedging positions
    Many professional market participants, including hedge funds and institutional investors, hedge their positions in advance using other financial instruments. This reduces the pressure on the market at expiration.

  3. Asymmetrical option distribution
    In most cases, options are distributed asymmetrically. For example, the market may be dominated by one type of option (call or put), making a sharp trend reversal unlikely.

  4. Short term effect
    Even if expiration causes volatility, its impact is usually short-lived. Within 24-48 hours, the market returns to its fundamentals.

Examples of neutral influence

In 2024, the market has shown repeated examples where large expirations did not lead to significant price changes:

  • The July 2024 $1.04 billion expiration was held without any noticeable volatility. Bitcoin price remained within a narrow range.

  • In October 2024, despite the expiration of $1.2 billion in options, Bitcoin remained stable due to growing interest from institutional investors.

As Bloomberg analyst Michael McGlone noted:
"The Bitcoin market is becoming more mature and events like options expiration are losing their critical importance."

Alternative views

Not all analysts agree with the neutral view. Some believe that expirations can amplify short-term volatility, especially if they coincide with low liquidity in the market. For example, in November 2023, a major expiration coincided with a sharp drop in trading volume, causing a temporary price drawdown.

According to Glassnode researchers, the key role is played by the volume of open interest (OI). The higher the OI, the greater the likelihood of significant price fluctuations. However, with increasing institutional participation, this effect is smoothed out.

Future Prospects

Options market volumes are expected to continue to grow in 2025, but their impact on prices will gradually decline. Factors supporting this trend include:

  • Increasing the number of market participants.

  • Growing share of institutional investors.

  • Development of new hedging instruments such as Bitcoin options ETFs.

Bitcoin options expiration is a significant event that attracts the attention of traders and analysts. However, the actual impact of expiration on the price of the cryptocurrency is often limited. Key factors such as market maturity, hedging, and the short-term nature of volatility make the Bitcoin market increasingly resilient to such events.

As the CEO of the analytics company Santiment noted:
"In the long term, the Bitcoin market is driven by fundamental factors such as supply, demand and innovation, rather than short-term events such as options expiration."

Thus, investors do not have to worry about sharp price movements associated with expiration if their strategy is based on long-term goals.