$23.6 billion Bitcoin options expire today, market stands at a crossroads

Today, the crypto world is holding its breath as a historic event unfolds: approximately $23.6 billion in notional value of Bitcoin options will expire today. This is not only the largest options expiration on record but also like a boulder thrown into a calm lake, with ripples that could reshape Bitcoin's short-term trajectory.

1. The Calm Before the Storm: Liquidity Dry-Up and Market Fragility

This massive options expiration coincides with an extremely unusual market environment. Currently, it is the Western Christmas holiday, with light trading activity and significantly reduced market liquidity. Last night (December 25), the market pre-empted an extreme liquidity shortage: on Binance, in a niche, low-liquidity trading pair called BTC/USD1, Bitcoin's price plummeted from $87,600 to $24,100 within seconds, then quickly rebounded. This was not a fundamental breakdown but a typical “flash candle” event, ruthlessly revealing that even small trades can trigger price dislocations when order book depth is insufficient.

Against this backdrop, the large-scale options expiration is no longer just a derivative settlement but a potential catalyst for amplified volatility. During the holidays, mainstream market buy and sell pressures are already weak, and any additional buying or selling pressure caused by options settlement will be magnified.

2. Core Mechanism: Gamma Squeeze and “Support Vacuum”

How does options expiration influence spot prices? The key lies in the “gamma squeeze” mechanism. Simply put, market makers, acting as intermediaries, hedge their sold options risk by holding opposite spot positions. When a large number of options expire simultaneously, market makers must unwind these hedges on a massive scale. This process temporarily dismantles the temporary support and resistance levels built by the options market itself, leading to a “support vacuum” state where prices are prone to sharp swings due to any capital flow in either direction.

The current options open interest structure is also dramatic. Data shows a large concentration of call options with strike prices between $100,000 and $125,000. This is far from Bitcoin’s current spot price of about $87,000, meaning that these optimistic bets on a “Christmas bull run” are now facing the risk of becoming worthless. Meanwhile, the so-called “max pain” point—the price at which the most options buyers suffer losses—is at $95,000. This provides a key psychological and technical anchor for short-term market price battles.

3. Personal View: Opportunity in Crisis, Stay Calm and Observe

In the face of such a complex situation, my view is: short-term volatility is highly likely to increase, but there is no need for excessive panic; instead, calmly observe the opportunities that may emerge.

First, this volatility is essentially a structural adjustment in the derivatives market, not a change in Bitcoin’s long-term narrative. Analysts also point out that the volatility arising during a “funding vacuum period” does not necessarily signal the start of a new major decline.

Second, opportunity in crisis. Some analysts believe that if Bitcoin’s price retraces to the previous low area, around $80,000 to $82,000, it could form an attractive short-term rebound opportunity. Early signs of “bullish divergence” have already appeared on some short-term charts, indicating that downward momentum may be weakening.