Why This Friday Could Significantly Impact Bitcoin Prices

The price of Bitcoin may see substantial fluctuations this Friday as billions in options are set to expire. A crypto market expert has indicated that the gravity of this event could lead to “something big,” potentially influencing both market volatility and investor behavior, whether they're retail or institutional.

Key Takeaways

A major Bitcoin options expiry of $23.6 billion is set for this Friday, potentially leading to significant price volatility.
Previous expiries have been substantially smaller, indicating a notable shift in market dynamics.
The removal of hedges due to the expiry may trigger sharp Bitcoin price movements.
Current low liquidity levels could amplify the impact of trading orders, leading to sudden price changes.
Observing the price reaction post-expiry may be more crucial than pre-expiry events.

Bitcoin

Anticipating Major Movement in Bitcoin Prices This Friday

Crypto analyst NoLimit has suggested that this Friday could be a pivotal point for Bitcoin. Over $23.6 billion in Bitcoin options are scheduled to expire on December 26, marking the largest options expiry to date in the market. The analyst urges anyone holding crypto to stay vigilant.

NoLimit explained that an options expiry involves leveraged bets on Bitcoin’s price. Call options wager on price increases, while put options predict declines. When these options expire, they typically become worthless or lead to buying and selling in the spot market to offset the positions.

He emphasized that with such a significant amount of options expiring on a single day, a considerable amount of risk will be removed from dealer accounts simultaneously. This offloading of risk is anticipated to significantly drive market volatility due to the unprecedented scale of this expiry.

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Source: Chart from Nolimit on X

Looking back at the numbers, previous year-end expiries were much smaller. In 2021, it was about $6 billion; in 2022, it dropped to $2.4 billion, grew to $11 billion in 2023, and reached $19.8 billion in 2024. NoLimit has noted that this year’s rise to $23.6 billion indicates a significant shift in market dynamics.

The analyst remarked that retail investors no longer command market dominance. He pointed out that institutional-sized risks are being actively adjusted, suggesting that Friday could result in notable price changes. NoLimit believes the scale and timing of this expiry mark it as a crucial event for traders and investors alike.

Understanding the Importance of This Friday

In his analysis, NoLimit outlined several reasons why the impending expiry of Bitcoin’s $23.6 billion options is critical. He noted that dealers are heavily hedged around key strike prices, and once the expiry occurs, these hedges will be removed. This removal could lead to sharp price movements for Bitcoin in either direction.

NoLimit observed that current market conditions could further enhance these impacts. With Bitcoin's liquidity being very low during this holiday week, a decrease in volume typically means that each order holds more sway. Thus, he suggested that a sudden price movement could happen even without major news.

He also pointed out that much of Bitcoin's Open Interest is centered around major psychological price levels. Once the expiry occurs, this open interest will vanish completely. This is why markets often display sideways trading leading into an expiry but can exhibit clear directional shifts shortly thereafter. According to the analyst, volatility is the key setup this week, and it’s essential to watch how Bitcoin’s price reacts after the expiry, rather than before.

Bitcoin
BTC trading at $87,643 on the 1D chart | Source: BTCUSDT on Tradingview.com