Bitcoin bulls face a “quarterly test” as $15 billion options expire on Friday

Traders looking for clues about whether the current Bitcoin rally will continue are focusing on one of the most noteworthy events in the derivatives market: the quarterly expiration of about $15 billion in options contracts.

The Zhitong Finance App noticed that on the Deribit platform, more than one-third of the Bitcoin options open contracts (that is, the total number of contracts) due to expire on Friday are tied to the September 25 expiration date. The bearish-to-bullish ratio (a closely tracked indicator that measures the ratio of selling options to buying options) is 0.70, indicating that there are more positions betting on price increases. The area with the highest concentration of call options is at the exercise price of $85,000, $90,000, and $100,000.

At around $84,000, Bitcoin trading is well above the so-called “max pain point” (max pain) level of $76,000 — at this price, the largest number of options will expire and be voided. This has made traders pay close attention to whether hedging activities around large bullish option positions will suppress the market before Friday's settlement.

Position layouts in the options market tend to temporarily cap gains. Market makers are generally neutral around the current price, but their position method may cause them to sell to maintain hedging balance when Bitcoin rises to $90,000 to $95,000, which may curb gains until the options expire.

Caroline Moron, co-founder of digital asset derivatives liquidity provider Orbit Markets, said, “As a result, hedging activity may suppress gains before they expire; once these options expire or roll over to the next quarterly expiration date, momentum may resume.”

This turning point in the options market comes after Bitcoin's strong rebound that began in August — when the US Treasury's buyback announcements helped push up most risky assets. Since then, Bitcoin has risen more than 30%.

This situation took on the expiration of BlackRock's iShares Bitcoin Trust (IBIT) record options last week.

Mauricio Di Bartolomeo, co-founder of cryptocurrency lender Ledn, said that those contracts are heavily biased towards bullish options, and the rise in Bitcoin has made many of these contracts profitable, forcing market makers who previously sold these options to buy IBIT shares to hedge their exposure.

He said that as new ETF shares are created, such purchases may be transferred to the underlying cryptocurrency. If Bitcoin continues to climb towards an area where exposure to call options is high, the expiration of Deribit on Friday could have a similar effect.

Di Bartolomeo said, “This kind of cryptographic native expiry undertakes this pattern,” and “if this wave of markets continues, the $85,000 and $100,000 bullish option blocks are where the same mechanism comes into play on the Deribit options book.”

Some traders are already looking beyond Friday. Jack Ostrovskis, head of OTC trading at Wintermute, said that positions are being moved to a later maturity date, and many traders choose Bitcoin call options that expire in October and December and exercise prices between $95,000 and $100,000. Some of the longer-term bets even extended to March 2027, with an exercise price of up to $150,000.

However, the size of a single expiration alone does not determine the future direction of Bitcoin. Oliver Cardin, head of marketing at Tesseract Group, said it's unclear to the public who holds the short side of these contracts.

“I would view this expiration as a position adjustment and rollover event rather than a determining factor in direction,” he said.