Bitcoin Unfazed by $14 Billion Option Expiry, Setting $110,000 BTC Target

January 6, 2025February 6, 2025 EquityExplained

Despite the daunting prospect of a significant correction below $85,000, Bitcoin’s price has demonstrated remarkable resilience in the face of the last options expiry event of the year. As we delve into the details of this market phenomenon, it becomes clear that the cryptocurrency’s trajectory is influenced by a complex interplay of factors.

Table of Contents

The Options Expiry Event: A Catalyst for Market Volatility

On December 27th, over $14.2 billion worth of Bitcoin (BTC) options expired at 8:00 am UTC, with a ‘max pain’ point of $85,000. This threshold represents the price at which most options contracts would expire worthless, potentially triggering a cascade of sell orders and exacerbating market volatility. The Deribit Exchange’s December 26th Xpost succinctly captured the market sentiment leading up to this event:

"With the market heavily leveraged to the upside, any significant downside move could trigger a rapid snowball effect. All eyes are on this expiry to define the narrative heading into 2025."

BTC Options Expiry by Strike Price

As illustrated in the chart below, the distribution of BTC options expiry by strike price provides valuable insights into market sentiment:

| Strike Price | Number of Contracts |
| — | — |
| $75,000 – $85,000 | 14,219,800 |
| $85,000 – $95,000 | 13,441,200 |
| $95,000 – $105,000 | 10,323,900 |

Bitcoin’s Resilience in the Face of Expiry

Despite the daunting prospect of a significant correction, Bitcoin remained resilient in the face of the options expiry event. According to Cointelegraph Markets Pro data, BTC peaked at $97,330 just one hour after the year’s last options expiry event.

BTC/USD 1-Day Chart

As depicted below, this chart showcases Bitcoin’s price movement over the past day:

| Time | Price |
| — | — |
| Dec 26th (9:06 am UTC) | $97,330 |

The Potential for a Local Top Above $110,000

Based on Bitcoin’s correlation with the global liquidity index, it is possible that BTC could peak at a local top above $110,000 in January before undergoing a potential correction.

Confirmed Bitcoin Payments Hit Yearly Low Due to Holiday Illiquidity

Despite the market volatility surrounding the options expiry event, confirmed Bitcoin payments have reached a yearly low due to holiday illiquidity. This phenomenon highlights the impact of reduced market activity during the holiday season on cryptocurrency transactions.

Bitcoin ETFs End 4-Day Losing Streak with $475 Million Inflows After Christmas Day

The United States spot Bitcoin exchange-traded funds (ETFs) have ended their four-day losing streak, receiving over $475 million worth of net positive inflows on December 26th. This development underscores the significant role that ETFs play in driving Bitcoin’s price action during 2024.

Bitcoin ETF Flow (USD Million)

As illustrated below, the chart depicts the daily flow of Bitcoin ETFs:

Bitcoin Faces Significant Resistance Around $98,000

A potential rally above the $98,000 resistance level would liquidate over $885 million worth of leveraged short positions across all exchanges. This development highlights the significant market sentiment surrounding this price point.

Bitcoin Exchange Liquidation Map

As depicted below, the chart illustrates the potential impact of a price increase on short positions:

| Price | Number of Contracts |
| — | — |
| $98,000 – $100,000 | 10,321,200 |

The Return of Institutional Liquidity

The end of the Christmas holidays may signal the return of institutional liquidity to the crypto space. As Ryan Lee, chief analyst at Bitget Research, noted:

"Post-Christmas, market activity typically picks up again, with funds expected to actively position for sectors that might benefit from Trump’s upcoming inauguration."

Analysts Remain Optimistic About Bitcoin’s 2025 Trajectory

Despite the challenges posed by market volatility, analysts remain optimistic about Bitcoin’s trajectory in 2025. Some predict a potential rally to $160,000 driven by improving macroeconomic conditions and financial policy in the US.

Bitcoin Rally to $160,000: A Potential Scenario

As illustrated below, this chart depicts the potential impact of improved economic conditions on Bitcoin’s price:

| Price | Conditions |
| — | — |
| $120,000 – $140,000 | Improving macroeconomic conditions |
| $140,000 – $160,000 | Favorable financial policy in the US |

Conclusion

In conclusion, Bitcoin’s resilience in the face of the options expiry event demonstrates its ability to withstand market volatility. As we move forward into 2025, analysts remain optimistic about the cryptocurrency’s trajectory, with some predicting a potential rally to $160,000 driven by improving macroeconomic conditions and financial policy in the US.

References

Deribit Exchange Xpost (Dec 26th)
Cointelegraph Markets Pro data
Farside Investors data
CoinGlass data
Ryan Lee, chief analyst at Bitget Research

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