glassnode: Bitcoin Options Set for Largest Expiry in History, Market Positioning Reset, Post-New Year Volatility Expected

BlockBeats News, December 19, glassnode released a statement stating, "Bitcoin is about to face the largest options expiry in history, with a notional value of approximately $23.58 billion in Bitcoin options set to expire on December 26, while the spot price is still within a recent range.

Over the past month, options trading activity has cooled down. Fund flows have significantly decreased, which usually indicates a weakened market confidence in the upside potential, while the demand for downside protection through put options remains. The implied volatility curve has seen a widespread decline, indicating reduced recent demand for hedging and upside leverage. The market is digesting a more controlled price movement. Currently, the at-the-money implied volatility across all maturities is around 44%, down more than 10 volatility points from recent highs.

The 25th skew (put option implied volatility minus call option implied volatility) remains positive, indicating that put options' pricing is still higher than call options. This suggests that the downside risk has already been fully priced in, and the skew pattern does not look like the typical skew seen before a breakout move. Arbitrage trading still dominates, and fund flows remain defensive.

Over the past year, the Bitcoin options market has grown rapidly, making hedging mechanisms increasingly important. This record-breaking options expiry will reset market positions and market makers' risk exposures. Following the reset, it is expected that post-New Year market volatility will increase."