Bitcoin Bears Face $3 Billion Loss as $16.5 Billion Options Expire

Bitcoin (BTC) investors are gearing up for a monumental event as $16.5 billion in options are set to expire on March 28. This expiry is the largest in Bitcoin's history, but its actual market impact is anticipated to be more subdued. The recent drop in BTC's price below $90,000 has caught many investors off guard, invalidating numerous bullish positions and shifting the market dynamics.

This price movement presents a critical opportunity for Bitcoin bears to avoid a potential $3 billion loss, which could significantly influence market behavior in the coming weeks. Currently, the total open interest for call (buy) options stands at $10.5 billion, while put (sell) options lag at $6 billion. However, $7.6 billion of these calls are set at $92,000 or higher, meaning Bitcoin would need a 6.4% gain from its current price to make them viable by the March 28 expiry. As a result, the advantage for bullish bets has significantly weakened.

Some analysts attribute Bitcoin’s weak performance to the ongoing global tariff war and government spending cuts, which increase the risk of an economic recession. Traders are concerned about slower growth, particularly in sectors that had driven market highs before recent declines. Meanwhile, Bitcoin bulls remain hopeful for a decoupling from the stock market, despite the 40-day correlation staying above 70% since early March. Their optimism stems from the expansion of the monetary base by central banks and increased Bitcoin adoption by various companies.

As the options expiry date nears, both bulls and bears have strong incentives to influence Bitcoin’s spot price. Bullish investors aim for levels above $92,000, but their optimism alone is not enough to ensure BTC surpasses this mark. Given the current market dynamics, Bitcoin bulls hold a strategic advantage heading into the monthly options expiry. For instance, if Bitcoin remains at $86,500 by 8:00 am UTC on March 28, only $2 billion worth of put (sell) options will be in play. This situation incentivizes bears to drive Bitcoin below $84,000, which would increase the value of active put options to $2.6 billion.

Below are five probable scenarios based on current price trends. These outcomes estimate theoretical profits based on open interest imbalances but exclude complex strategies. Between $81,000 and $85,000, $2.7 billion in calls (buy) vs. $2.6 billion in puts (sell) favors the call instruments by $100 million. Between $85,000 and $88,000, $3.3 billion calls vs. $2 billion puts favor calls by $1.3 billion. Between $88,000 and $90,000, $3.4 billion calls vs. $1.8 billion puts favor calls by $1.6 billion. Between $90,000 and $92,000, $4.4 billion calls vs. $1.4 billion puts favor calls by $3 billion.

To minimize losses, bears must push Bitcoin below $84,000—a 3% drop—before the March 28 expiry. This move would increase the value of put (sell) options, strengthening their position. Conversely, bulls can maximize their gains by driving BTC above $90,000, which could create enough momentum to establish a bullish trend for April, especially if inflows into spot Bitcoin exchange-traded funds (ETFs) resume at a strong pace.