The Bitcoin market is bracing for a significant event on December 29 at 8:00 AM, with the expiration of $10.1 billion in options. Current data shows that call options have a clear advantage, but bears could limit their losses by driving Bitcoin’s price below $42,000.
Both bulls and bears have incentives to influence Bitcoin’s spot price, and as the expiration date approaches, the outcome becomes measurable based on the strike price. Deribit leads the options market with $7.7 billion in open interest, followed by the Chicago Mercantile Exchange (CME) with $1.38 billion, which is more than double that of the third-place OKX.
The potential approval of a spot Bitcoin exchange-traded fund (ETF) in January significantly impacts the December options expiry. The SEC has notably shifted its approach, actively engaging with ETF creators instead of outright rejections, signaling a positive change and raising expectations for a potential ETF approval in January.
Another key development is Binance‘s recent settlement with the U.S. Department of Justice and regulators, indicating progress toward compliance and anti-money laundering practices in the crypto space. This is further evidenced by changes in Grayscale Investments’ board and the resubmission of their request to convert the Grayscale GBTC Trust, which could increase the likelihood of a spot ETF approval.
The total open interest for the December options expiry stands at $10.1 billion. However, the actual amount may be much less due to the recent surge above $40,000 catching bearish investors off guard. Deribit and CME options show a 32% underrepresentation of put options compared to $5.4 billion in call open interest, suggesting a potential imbalance.
If Bitcoin’s price remains around $43,100 on the morning of December 29, only $185 million worth of put options may be valid. This discrepancy arises from the possibility that the right to sell Bitcoin at $40,000 or $43,000 becomes worthless if BTC trades above these levels at expiry.