【 Quick Report 】 Bitcoin welcomes a critical milestone at the end of the year! The $23 billion option contract will expire next Friday, and the risk of market volatility has escalated

Bitcoin faced significant pressure in the final weeks of 2025. It was learned that the options market indicated that approximately $23 billion worth of Bitcoin options contracts would expire in a concentrated manner next Friday, potentially amplifying market volatility on top of the already high levels. This amount represents more than half of the total open interest on Deribit, the world's largest Bitcoin options trading platform, reflecting traders' pricing of ongoing downside risks.

The recent market volatility has been exceptionally intense. During the US trading session on Wednesday, the fluctuation in Bitcoin prices exceeded $130 billion within an hour, triggering a chain of liquidation of long and short positions. Meanwhile, the total market capitalization of the entire cryptocurrency market repeatedly saw a seesaw near the $3 trillion mark, indicating a high degree of market tension.

Nick Forster, founder of digital asset trading platform Derive.xyz, stated that as the new year approaches, the market continues to decline, with prices in a fragile state of being "on the edge of a knife". On Thursday, Bitcoin once rose by about 4%, touching $89,430, but then quickly gave up gains, falling below the $85,000 mark during trading, and reaching a low of $84,450.02. Compared to its historical high of over $126,000 in early October this year, Bitcoin has fallen by nearly 30%.

From the perspective of option structure, market sentiment remains distinctly bearish. Forster pointed out that the 30-day implied volatility of Bitcoin has rebounded to nearly 45%, while the option skew remains around -5%, indicating that the demand for downside protection is significantly higher than that for upside bets. The skew for longer-term options also remains in the negative range, indicating that traders are preparing for the continued downside risk in the first and second quarters of 2026, especially against the backdrop of the re-emergence of selling pressure from previously long-dormant wallets.

The distribution of positions around the expiration date of the December 26th option further highlights market divergence. Call options are mainly focused on strike prices of $100000 and $120000, suggesting that some investors still expect a technical rebound by the end of the year. However, the short-term dominant force is still bearish, with put options highly concentrated around the $85000 line. STS Digital estimates that the size of open contracts near this price point is approximately $1.4 billion, which may create a "gravitational effect" on spot prices before option expiration.

After the outlook expires, traders generally focus on two potential catalytic factors. One is to hedge against MSCI's decision on January 15th, which may remove digital asset treasury companies with holdings of more than 50% of encrypted assets from its index system; The second possibility is that the call over writing strategy may be reactivated. Maxime Seiler, CEO of STS Digital, stated that these fund flows may further amplify the downward volatility while limiting the upward space for prices.

The overall market sentiment remains fragile. Since the beginning of this year, the cumulative decline has been about 23%, and Bitcoin is heading towards its worst quarter since the second quarter of 2022. At that time, the successive crashes of TerraUSD and Three Arrows Capital had dealt a heavy blow to the entire industry. Timothy Misir of BRN pointed out that Bitcoin has never been able to regain its key technical position, causing the market to fall into a "fragile sideways stalemate".

However, some traders have not completely given up their bets on a rebound. Forster stated that the current market volatility remains high, and overall positions tend to be defensive. The upward tail risk has not completely disappeared, and the market is preparing for a turbulent start to the new year.

The current market sentiment still appears weak. The cumulative decline of Bitcoin this year has approached 23%, and it is moving towards its worst quarterly performance since the second quarter of 2022. At that time, the successive collapses of TerraUSD and Three Arrows Capital had had a serious impact on the industry. Timothy Misir from BRN institution mentioned that Bitcoin has never been able to break through key technological levels again, which has put the market in a "fragile and stagnant consolidation state".

Nevertheless, some traders still have a glimmer of hope for a market rebound. Forster pointed out that the current market volatility remains high, overall holdings tend to be conservative, and the upward tail risk has not completely dissipated. The market is preparing for an uncertain early stage.