Glassnode: Bitcoin options are approaching the largest expiration in history, market positions are resetting, and volatility may increase after the New Year

On December 19, Glassnode published an article stating, “Bitcoin will face the largest options expiration in history, with a notional value of approximately $23.58 billion. Bitcoin options will expire on December 26, while the spot price remains within a recent range. Over the past month, options trading activity has cooled down. Capital flows have significantly decreased, which typically indicates waning market confidence in upside prospects, while demand for protective put options remains. The implied volatility curve has declined across the board, indicating a weakening of recent hedging and upside leverage demand. The market is digesting a more controlled price movement. Currently, implied volatility at all maturities is around 44%, down more than 10 volatility points from recent highs. The 25-day skew (the difference between implied volatility of put options and call options) remains positive, meaning put options are still priced higher than call options. This suggests that downside risk is fully reflected in prices and does not resemble the skew pattern usually seen before breakout scenarios. Arbitrage trading still dominates, and capital flows remain defensive. Over the past year, the Bitcoin options market has grown rapidly, making hedging mechanisms increasingly important. This record-breaking options expiration will reset market positions and the risk exposure of market makers. After the reset, volatility is expected to rise after the New Year.”