### As the expiration of standard options worth $23 billion approaches, it threatens to increase volatility in 2026
- Bitcoin options worth $23 billion expire on December 26, in the largest expiration event ever.
- Implied volatility shrinks to 44% across all maturities, with year-end positioning turning defensive.
- Expect increased volatility after the expiration period as traders reposition ahead of January's catalysts.
Bitcoin's price has entered the last weeks of 2025 under increasing pressure, with Bitcoin (BTC) options worth up to $23 billion expiring on December 26.
This standard expiration threatens to amplify volatility as 2026 approaches, with traders preparing for significant price swings following the reset of hedging mechanics at year-end.
Glassnode highlighted on December 19 that the spot price of Bitcoin remains trapped in its recent range despite the impending massive expiration.
The combination of slowed participation, compressed volatility metrics, and defensive positioning suggests markets are ready to contain price movement through year-end before disruptions return in January.
Options activity has quieted over the past month, with lighter flows compared to previous periods. This slowdown reflects decreased conviction in bullish narratives, even as demand for put protection persists, resulting in a defensive stance in the options market despite prices holding above key support levels.
#### Bitcoin Price: Volatility metrics in focus in the near term
Implied volatility has decreased across the curve, indicating weak demand for near-term hedging and upside leverage. Markets are pricing a more contained price behavior as 2025 comes to an end.
Implied volatility has reached around 44% across all expirations, down more than 10 points from recent highs. This contraction reflects year-end dynamics, as volatility sellers profit from declining implied volatility.
The volatility risk premium has remained positive for one week since the last Federal Reserve meeting, benefiting sellers who collected the premium while hedging flows contained realized moves.
Delta 25 skew remains in put territory, indicating that puts are more expensive than calls, signaling bearish risk pricing in the options market.
This differs from the pattern before clean breakouts, where buying demand pushes skew negatively.
The flow of options money tilted towards puts this week, despite modest volumes. Traders' positioning leans towards calls as year-end approaches, mechanically dampening spot volatility.
Long gamma trades required rebalancing hedges by buying on weakness and selling on strength, which reduced Bitcoin price volatility.
#### Expiration of standard Bitcoin options resets market structure
The expiration on December 26 represents the largest expiration event for Bitcoin options ever. The reset will liquidate current positions and change the hedging mechanics that contained volatility in December.
The options market has grown sharply over the past year, making hedges more crucial for understanding spot price behavior. With contracts expiring and positions rolling off, heightened mechanical dampening of volatility is expected.
Traders expect increased volatility after the new year as new positioning solidifies. January catalysts loom:
1. MSCI decision on January 15: could lead to the exclusion of treasury companies with digital assets (like MicroStrategy) from indices if digital asset holdings exceed 50% of assets, creating uncertainty and increasing hedging activity.
2. Renewed call underwriting flows: may limit upside first, but a breakout above strike levels could lead to sharp moves.
#### Defensive positioning dominates year-end
The mix of heavy flow in puts and compressed implied volatility indicates a dominance of defensive positioning.
Important note: This analysis relies on data up to December 20, 2025, and the cryptocurrency market is highly volatile. Bitcoin is currently trading in a narrow range (around $88,000-$89,000 according to multiple sources as of December 21). Always do your own research and assess risks before any trading or investment.
@Binance Square Official #بيتكوين $BTC
