Bitcoin's $28B Options Expiry: The Hidden Catalyst Behind Market Volatility

Bitcoin traded below $90,000 on Tuesday as holiday-thinned liquidity, surging precious metals, and a looming record options expiry shaped price action across crypto markets.

After briefly touching $90,000 intraday on Monday, BTC faded to around $87,400 the following day — continuing a multi-week pattern of upside pushes that meet immediate overhead resistance. According to The Block’s price page, ether also fell to roughly $2,960, BNB to $850, and Solana to $125, pulling total crypto market capitalization back to $3 trillion.

"The tone remains defensive," said Timothy Misir, head of research at BRN. "Rallies lack follow-through, while sell-offs are shallow but persistent."

Wall Street capital flows reflected this unease. U.S. spot bitcoin ETFs posted $142 million in outflows on Dec. 22, The Block’s data shows. ETH products saw $84.6 million in inflows, while Solana and XRP ETFs attracted $7.47 million and $43.89 million, respectively.

Record Options Expiry Becomes the Primary Driver

Analysts across firms agree that Friday’s Boxing Day expiry is now the dominant catalyst. Roughly 300,000 BTC option contracts — around $23.7 billion in notional value — are set to expire, representing more than half of Deribit’s total bitcoin open interest.

Deribit Chief Commercial Officer Jean-David Pequignot said the expiration is "record-shattering," with $28.5 billion in combined BTC and ETH options set to roll off — double last year’s figure. Despite the scale, he said the market remains "orderly," with bitcoin’s DVOL index hovering near 45.

Positioning clusters around the 85,000 and 100,000 strikes. Pequignot described the structure as "residual optimism for a Santa rally, even if conviction appears limited." Average funding rates have also climbed from 0.04% to 0.09%, signaling a renewed build-up in leveraged longs despite thinning depth.

QCP Capital added that traders are closing out risk rather than rotating it, noting that BTC perpetual open interest fell by approximately $3 billion overnight, while ETH lost around $2 billion. "Liquidity is thinning meaningfully," the firm said, warning that contraction in depth means squeeze risk is elevated in both directions.

Misir and QCP both noted that Christmas-week moves tend to mean-revert in January once market participation returns, making current swings more mechanical than fundamental.

While crypto struggles to find direction, gold surged to a new record near $4,450. Misir said the divergence highlights macro hedging demand returning into year-end as investors navigate political uncertainty.

President Trump confirmed he will announce his pick for the next Federal Reserve chair by early January. It’s not an immediate catalyst, Misir said, but rather a factor that reinforces defensive positioning until clarity emerges.

As of Dec. 23, BTC was on track for its worst fourth quarter returns in eight years. Bitcoin shed 6% year-to-date and lost nearly 20% in the last six months, according to The Block's data.