$3 Billion in Bitcoin Options Expires Today: Why It Matters

About $3.6 billion worth of Bitcoin options contracts will expire later today on some of the largest derivatives exchanges. What does it mean for the biggest digital coin price?

Most of the options have $95 million in expiring contracts at Deribit and $1.6 billion at CME, according to data from Coinglass and CME.

In the world of derivatives, options allow traders to predict or hedge the volatility of an asset. In Bitcoin options, traders buy a contract that allows them to buy or sell an asset at an agreed price at a later date.

That is, when the contract expires, they have the option to buy or sell at the predetermined price, regardless of the price change.

Traders do not need to buy bitcoins when their contract expires. As the contract states, this is the only option. Traders who know they don't want to exercise their options when they expire can either carry them forward or close them out now at the market price and open a new contract that expires in the future.

Options expiration is not always a guarantee of volatility, experts told Decrypt. If option contracts expire without being exercised, the value of the asset is immovable.

As for this month's options contract, the highest pain point — or the price at which the highest number of contracts expire without profit — is $48,000, Derbit data shows. This means that if the price of BTC touches $48,000 before the end, a large number of traders will suffer losses.

The prevailing prediction among analysts is that if Bitcoin can stay above $48,000 by the time this month's options expire, traders will exercise their contracts and use this as an opportunity to take profits. In other words, BTC could see some real selling pressure today.

Coinglass data shows that, overall, traders are feeling pretty optimistic. For all Bitcoin open interest, regardless of expiration date, 62% are calls, meaning traders who enter the contract are strongly betting that the price of Bitcoin will go higher by the expiration date. When 38% is deposited – a bet on the value of the property.

Today's $3 billion expiration date is nothing compared to the value of contracts expiring on March 29.

For example, $95 million worth of options expire today in December. However, there are $4.7 billion worth of March contracts on the exchange. The same can be said of open interest on the CME, which has $1.6 billion worth of contracts that expire today and will be around $18 billion at the end of March.

This is likely because traders expect the Bitcoin halving to cause more price action for BTC. A Bitcoin halving will reduce the reward paid to Bitcoin miners for approving transactions. This time it will go from 6.5 BTC to 3.25 BTC. In the past, an increase in scarcity has usually started a price rally for Bitcoin.

BTC is currently at $51,000.57, a 24-hour drop of 1.7%, according to CoinGecko. Over the past seven days, the biggest digital coin hasn't budged much.

The property's value has increased since the beginning of the year when it sold for $44,168. The approval of the space's Bitcoin exchange-traded funds (ETFs) on January 10 led to a flood of capital into the crypto space.

Edited by Stacy Elliott.