Bitcoin’s Next Rally Hinges on Over $5.6 Billion Options Expiry

Over $5.6 billion in Bitcoin and Ethereum options are set to expire today, driving heightened volatility as traders confront critical support levels.

This expiry could spark the next big shift in crypto prices, with both bullish conviction and downside risk on display.

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Billions on the Line: Option Expiry Event Brings Increased Uncertainty

The crypto market is tense ahead of today’s options expiry. Open interest and trader activity reveal a battle between optimistic buyers and cautious sellers. The result of this major expiry could set the tone for both assets going into the weekend.

According to data on Deribit, over $5.6 billion in Bitcoin and Ethereum options will expire today.

Bitcoin options account for the lion’s share of these contracts, with a notional value of $4.7 billion. The max pain price, where the most options lose value, is $118,000, forming a crucial support area.

The total open interest (OI) for these expiring Bitcoin options is 38,870 contracts. According to Deribit analysts, Bitcoin traders are split between $110,000 puts and $120,000 calls. This highlights the standoff between bulls and bears.

Meanwhile, Ethereum appears more bullish, with the put-to-call ratio at 0.90. Bitcoin’s ratio of 1.10 shows a preference for downside protection, while Ethereum’s lower ratio signals upward momentum.

Today, at 8:00 UTC, $944.5 million in Ethereum options will expire on Deribit. Ethereum’s max pain is $4,400, and open interest is nearing 217,000.

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Today’s expiry, significantly higher than the $4.3 billion witnessed last week, has both retail and institutional traders on edge

“…BTC traders are split between $110K puts and $120K calls, while ETH flows are more bullish,” the analysts wrote.

This expiry event is under close watch. Surges in open interest often happen before spikes in volatility, with large-scale expiries driving quick price changes and short-term turbulence.

During these periods, lower liquidity can amplify swings and mislead market signals for both spot and derivatives. Major options expiries can magnify volatility, especially when positioning is crowded.

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Risk Intensifies as Traders Eye Key Support

According to Glassnode, Bitcoin is trading above its short-term holder cost basis. This signals ongoing bullish momentum but also raises short-term risk. If the rally continues, it may enter an overheated zone and risk a sharp correction.

For Ethereum, rising open interest indicates more trader participation ahead of potential market-moving shifts.

“Bitcoin continues to trade well above the Short-Term Holder Cost Basis. The rally remains below the Heated zone (+1 STD), suggesting momentum is high but approaching short-term risk conditions,” said Glassnode in a post.

Past increases in open interest have accompanied price breakouts, often reflecting growing conviction among traders.

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Still, when open interest surges, positions can become crowded and vulnerable. Glassnode data notes that a recent pullback is testing leveraged positions, with key support at $118,000 for Bitcoin and $4,400 for Ethereum. Notably, these are the max pain levels for either asset.

“…The current pullback is testing these positions, helping to reset leverage. It will be key to see where buyers step in and whether support levels attract renewed demand,” wrote Glassnode.

This week’s expiry is part of a larger trend connecting derivatives activity with spot prices and liquidity risk. Options expiry periods may trigger sharper swings due to trader positioning. While options can dampen long-term volatility, crowded expiry events often prompt short-term price spikes.

Therefore, as these options are near expiry, traders and investors should brace for volatility, with Bitcoin and Ethereum likely gravitating toward their max pain support levels. However, this volatility eases after options expire, as traders adjust to new market environments.

If buyers absorb expiring positions, confidence may return, boosting the chance of further upside, particularly during the weekend when trading volumes are low.

However, a break below support with falling open interest could mean a surge in short-term volatility.