$8.3B Bitcoin Options Expiry Looms as Crypto Markets Tumble

The crypto derivatives market is bracing for a significant liquidity event as approximately 91,000 Bitcoin options contracts, representing a notional value of $8.3 billion, are set to expire on Friday, January 30. This expiry, the largest for the month, arrives during a period of intense market stress. According to the provided data, crypto markets have shed roughly $215 billion in value since the start of the week. This sell-off has pushed total market capitalization below the $3 trillion mark for the first time since mid-December, with analysts noting it has fallen to its lowest level since April—a potential signal that a bear market is now fully underway.

The broader macroeconomic and geopolitical backdrop has fueled the downturn. The Federal Reserve has maintained US interest rates steady at 3.5% to 3.75%, a level significantly above its 2% target, continuing a restrictive monetary policy environment. Concurrently, reignited geopolitical tensions in the Middle East have sparked further risk aversion among investors. These factors have converged to create a perilous setting for the scheduled options expiry, which market participants fear could act as a catalyst for even sharper price movements.

The structure of the expiring Bitcoin options contracts reveals a market leaning bullish in its positioning but vulnerable to losses. Data from Deribit and Coinglass shows a put/call ratio of 0.54, indicating there are far more expiring call options (bets on price increases) than put options (bets on declines). However, the critical “max pain” price—the strike price at which the maximum number of options would expire worthless—is approximately $90,000. With Bitcoin’s spot price crashing 8% to around $81,300 at the time of writing, well below this level, a vast number of these bullish call contracts are destined to expire out of the money.

Further analysis of open interest (OI), which represents the total value of outstanding contracts, paints a picture of mounting bearish sentiment for future expiries. While the highest concentration of OI remains at the $100,000 strike price with $1.9 billion, significant bearish bets are accumulating at lower levels. There is over $1 billion in open interest each at the $75,000, $80,000, and $85,000 strike prices. This suggests traders are increasingly hedging or speculating on further downside. Total Bitcoin options OI across all exchanges has been climbing since the start of the year and now stands at $58 billion, indicating the derivatives market’s growing influence on spot price action.

The volatility event is not isolated to Bitcoin. The expiry batch includes around 440,000 Ethereum options contracts with a notional value of $1.3 billion. The setup for Ethereum is similarly bearish, with a put/call ratio of 0.74 and a max pain price of $3,100. Mirroring Bitcoin’s plunge, Ether prices tanked 9%, falling to around the $2,700 level, which also places its spot price below the max pain threshold. Total Ethereum options open interest across exchanges is approximately $35 billion. Combined, the total notional value of crypto options expiring on Friday reaches roughly $9.6 billion.

Deribit, a leading crypto derivatives exchange, has warned that “expiry could amplify moves around key levels, especially around the pain zones.” This prediction appears to be materializing in real-time as spot markets experience a severe downturn. The simultaneous expiry of such a large volume of contracts, particularly those set to expire out of the money, can force market makers and large holders to adjust their hedging positions, potentially creating cascading sell pressure in the spot market. This dynamic is exacerbating the existing sell-off, turning what might have been a correction into a more pronounced crash, with altcoins experiencing a “double-digit bloodbath.”