The Great Squeeze: How a $27 Billion Options Expiry Will Decide Bitcoin’s Next Move
Bitcoin has been trapped for weeks, but the cage is about to break. The key to the frustrating $85,000-$90,000 stalemate lies in the complex mechanics of derivatives hedging. Now, a colossal options expiry on December 26th—involving a staggering $27 billion in contracts—is set to remove these artificial constraints. The data reveals a strong bullish skew, making a powerful breakout toward the mid-$90,000s the most probable path forward.
How Gamma and Delta Created the “Prison”
The invisible force pinning Bitcoin has been “gamma.” This is a measure of how aggressively options dealers must hedge their risk in the spot market. Throughout December, a massive wall of put options near $85,000 forced dealers to buy BTC on dips to stay neutral. Simultaneously, a ceiling of call options near $90,000 forced them to sell on rallies.
This dealer hedging created a self-reinforcing range, suppressing volatility regardless of broader market sentiment. It was a mechanical prison, not a reflection of true bullish or bearish conviction.
Why This Options Expiry is a Bullish Catalyst
On December 26th, over half of Deribit’s open interest—worth $27 billion—expires. This event is critical because it unleashes gamma’s grip. As these contracts expire, dealers are freed from their relentless hedging obligations.
The structure of this options expiry is notably bullish. The put/call ratio is just 0.38, meaning there are nearly three times more bullish call options than bearish puts. Furthermore, the “Max Pain” price—where the most options expire worthless—is at $96,000. This concentration of open interest well above the current price creates a powerful gravitational pull to the upside once hedging pressure vanishes.
The Path Forward: Breaking Toward $96,000
With implied volatility at monthly lows (~45), the market isn’t pricing in a crash. Instead, the setup favors an upside resolution. The most likely scenario post-expiry is a momentum move toward the $94,000-$96,000 zone as the market targets the area of maximum dealer pain and highest open interest.
While a breakdown below $85,000 remains possible, the derivatives data heavily favors the bulls for the final week of the year.
My Take
This is a textbook volatility-coiling setup. The market has been artificially compressed by gamma, and the energy release tends to be violent. The bullish skew of this options expiry provides a clear roadmap: expect a test of $94,000-$96,000 in the days following December 26th. Traders should prepare for a potential “gamma squeeze” upward, where chasing dealers amplify the move. This is the final trading week’s defining event.