The effect of options expiration weakens, and Bitcoin may break through the 85,000–90,000 USD fluctuation range

As the large-scale Bitcoin options expiration approaches, the derivatives market structure is changing. Market participants believe that Bitcoin’s price is likely to break out of the sideways trading range of $85,000 to $90,000 since December and push towards higher levels. Previously, amid a strong US stock market and gold reaching record highs, Bitcoin remained confined within a range, disappointing many investors. The key reason behind this was the hedging mechanisms in the options market.

Near the current price, a large volume of options are set to expire. Options give traders the right to buy or sell Bitcoin at a specific price, while option sellers typically hedge dynamically through spot and futures markets. Their behavior is influenced by “Delta” and “Gamma.” When the price approaches the high-Gamma zone, traders need to buy and sell frequently to hedge risks, which suppresses price volatility.

Market analysis indicates that during December, large put options around $85,000 provided price support, with traders passively buying when prices dipped; meanwhile, call options near $90,000 limited upward movement, prompting traders to sell during rebounds. This hedging-driven behavior is the main reason for Bitcoin’s continued sideways movement.

However, about $27 billion worth of Bitcoin options will expire on December 26. As Gamma and Delta effects gradually diminish, this “stabilizer” is losing effectiveness. Data shows that over half of open interest on the Deribit platform is about to expire, with the put-to-call ratio at only 0.38, indicating a market overall leaning bullish. A large number of contracts are concentrated at strike prices above $100,000 to $116,000.

Additionally, the maximum pain point in the options market is around $96,000, meaning that at this level, option sellers stand to gain the most, which historically tends to exert upward pressure on the price. Meanwhile, Bitcoin’s implied volatility remains near a one-month low, with the Volmex Implied Volatility Index hovering around 45, indicating that traders have not fully priced in a potential directional breakout.

Overall, with options expiring, market sentiment leaning bullish, and volatility remaining low, Bitcoin’s price is more likely to break upward out of the current range, testing levels above $90,000, while the probability of falling below $85,000 continues to decrease.