Expiration of ~28B in Crypto Option Contracts Create Room for Fragmented Liquidity

A record-breaking ~$28 billion in crypto options primarily Bitcoin and Ethereum expired yesterday, often called the “Boxing Day” expiry, due to the holiday. Mostly on Deribit, the leading crypto options exchange.

Bitcoin: ~$23.6–$23.7 billion notional value around 267,000–268,000 contracts. Ethereum: ~$3.7–$3.8 billion around 1.28 million contracts. BTC put/call ratio: ~0.35–0.38 bullish skew, more calls than puts. BTC max pain point: ~$95,000–$96,000 the price where most options expire worthless. ETH max pain: ~$3,100.

This was the largest crypto options expiry ever by notional value, combining monthly, quarterly, and annual settlements. The event contributed to choppy, range-bound trading in December— BTC mostly stuck between $85,000–$90,000 due to gamma hedging by market makers.

Post-expiry, hedging pressures have eased, which could allow for greater volatility or a breakout in the coming days/weeks—though holiday-thin liquidity has kept moves muted so far. Bitcoin is trading around $88,000–$89,000, with the broader market relatively quiet amid year-end conditions.

Large expiries like this often act as volatility catalysts, but the market absorbed it without extreme swings yesterday. Traders are now watching for potential relief rallies or further downside into 2026.

The record ~$28 billion crypto options expiry primarily on Deribit has now passed, and the market absorbed it relatively calmly. Bitcoin settled the day around $87,500–$88,500, well below the pre-expiry max pain point of ~$95,000–$96,000, the strike where the most options expire worthless, maximizing pain for buyers.

Gamma hedging relief: Leading up to expiry, heavy dealer gamma exposure pinned BTC in a tight $85,000–$90,000 range. Market makers hedged aggressively buying dips near $85K, selling rallies near $90K, suppressing volatility.

With over 50% of Deribit’s open interest cleared, this “price trap” or “lid” has lifted ? expect increased volatility in the coming days/weeks as mechanical hedging pressures ease.

No major spike on expiry day: Holiday-thin liquidity and orderly settlement prevented extreme moves. BTC briefly touched $89,100 intraday but closed lower, reflecting short-covering and caution rather than a breakout.

Large expiries like this often act as volatility catalysts once passed, removing artificial anchors and allowing underlying demand/supply to drive price. Potential upside bias: Pre-expiry positioning was bullish— put/call ratio ~0.38, heavy calls at $100K+ strikes. Many traders likely rolled positions into 2026 contracts rather than letting them expire.

If institutional/ETF inflows resume post-holidays, this could fuel a relief rally toward $90,000–$95,000 or higher some analysts eye $100K–$110K. BTC failed to reach max pain, meaning more calls expired worthless bearish signal for option buyers.

Combined with recent spot Bitcoin ETF outflows ~$175M on Dec 24 and Q4 2025 underperformance, a test of $85,000 support remains possible if sentiment sours. Implied volumes on Deribit’s DVOL dropped to ~45% pre-expiry, signaling low expected turbulence. Post-expiry “gamma flush” could reverse this ? sharper moves ahead, especially as trading volume normalizes in January.

Ethereum max pain $3,100 also settled lower between $2,950–$3,000, with similar dynamics. Altcoins may follow BTC’s lead, but thin liquidity amplifies risks. A sustained move above $90,000 could trigger FOMO and rapid upside. Below $85,000 risks liquidations.

Low liquidity into New Year’s could keep moves muted short-term, but fresh capital inflows in Q1 2026 are a common pattern. Past large expiries like in Q3/Q4 2025 led to post-event trends driven by fundamentals (ETFs, macro) rather than options mechanics.

Overall, the expiry cleared significant overhang without drama, setting the stage for a potential regime shift—likely more volatile and directionally decisive—heading into 2026. Bullish skew suggests upside probability, but caution rules in thin markets.