Crypto Market Braces for $28.5 Billion Options Expiry Amid Heightened Volatility

The cryptocurrency market found itself embroiled in another wave of volatility today, December 23rd, as significant selling pressure emerged across major assets. Bitcoin, after a fleeting attempt to breach the $90,000 mark last night, swiftly retreated, dipping below $88,000 earlier this morning. Ethereum mirrored this downturn, losing its footing below the crucial $3,000 threshold.

This renewed market jitters come as traders brace for a colossal “Super Settlement Day” this Friday, December 26th. Deribit, the world’s largest cryptocurrency derivatives exchange, is poised to witness the expiry of an unprecedented $28.5 billion worth of Bitcoin and Ethereum options, a factor heavily contributing to the recent price swings between $85,000 and $90,000 for Bitcoin.

Jean-David Pequignot, Chief Commercial Officer at Deribit, underscored the monumental scale of this event, noting that the expiring contracts represent over half of the platform’s staggering $52.2 billion in open interest.

Pequignot further elaborated that this year-end expiry “symbolizes the culmination of a full year,” a period he characterizes by a fundamental shift in market dynamics. The industry, he suggests, has transitioned from its historically speculative cycles to a more mature, institutionally-driven, and policy-influenced “supercycle.”

Amidst this backdrop, market participants are closely monitoring the ‘maximum pain price’ – the strike price at which the largest number of options contracts would expire worthless, inflicting maximum financial loss on option holders. While its predictive power remains a subject of debate among analysts, many traders still factor this metric into their strategic positioning.

According to Pequignot, Bitcoin’s current maximum pain price is identified at $96,000.

However, the market’s current structure also signals significant downside risks. Pequignot highlighted a substantial concentration of open interest in put options at the $85,000 strike price, amounting to a formidable $1.2 billion. This cluster of bearish contracts could act as a powerful accelerator, intensifying downward price pressure should selling momentum gain traction.

Despite these immediate concerns, bullish sentiment has not entirely dissipated. Evidence of optimism persists in the form of medium-term call spread strategies targeting price levels between $100,000 and $125,000, indicating a sustained belief in Bitcoin’s long-term appreciation. Nevertheless, Pequignot conceded that the cost of short-term protective put options has risen sharply, reflecting heightened market apprehension regarding immediate volatility.

Intriguingly, traders are not simply liquidating their defensive positions but are strategically “rolling over” their exposure into the subsequent month. Specifically, capital is flowing out of December-expiring put options with strike prices ranging from $85,000 to $70,000, and into January-expiring put spread combinations concentrated between the $80,000 and $75,000 strike prices.

This sophisticated maneuver suggests that while investors have secured fundamental protection against immediate year-end risks, they maintain a strong sense of caution and risk awareness extending into early 2026, unwilling to let their guard down.