Bitcoin and Ethereum Options Expiry: Implications for Price Action and Positioning in Q1 2026

The first major Bitcoin and Ethereum options expiry of 2026 has underscored a pivotal shift in market dynamics, revealing a pronounced bullish bias among traders while introducing volatility risks tied to concentrated strike levels. With over $2.2 billion in notional value expiring-$1.87 billion in Bitcoin and $395.7 million in Ethereum-the event marked a structural reset in positioning and hedging pressures, offering critical insights into strategic realignment and volatility expectations for the year ahead.

Bullish Positioning and Max Pain Dynamics

Bitcoin's positioning at expiry reflected a clear tilt toward upside participation. At settlement, the asset traded near $88,972, just above its max pain level of $88,000, with a put-to-call ratio of 0.48 (14,194 calls vs. 6,806 puts). This skew, coupled with block trade activity where calls accounted for 36.4% of volume compared to 24.9% for puts, signaled a market prioritizing growth over downside protection. Ethereum mirrored this trend, albeit with a more cautious optimism: its put-to-call ratio stood at 0.62 (80,957 calls vs. 49,998 puts), and call volume dominated at 73.7% of executed block trades.

The concentration of expiring contracts near key strike levels-Bitcoin's $88,000 and Ethereum's $2,950 max pain-introduced volatility risks. If prices deviated from these levels, hedging pressures from options dealers could amplify short-term swings. However, the post-expiry reset, which cleared over 45% of Bitcoin's open interest, reduced structural constraints, creating a cleaner environment for fresh risk-taking.

Strategic Realignment and Macro Influences

Traders are increasingly shifting from short-term speculative bets to longer-term strategies. Bitcoin's options activity has pivoted toward Q1 2026 maturities, with significant open interest in March and June 2026 expiries, particularly around $130,000 and $180,000 strike levels. This suggests a mid-term expectation of Bitcoin surpassing $100,000, with a 24% probability priced into the market. Ethereum's positioning, while less aggressive, also shows a focus on sustained upside, with cautious optimism dominating over defensive hedging.

Macro factors further complicate the outlook. The expiry coincided with heightened sensitivity to U.S. nonfarm payroll data and a Supreme Court ruling on Trump-era tariffs, both of which could influence risk appetite in crypto markets. Meanwhile, regulatory developments-such as the UK FCA's anticipated stablecoin regime- have bolstered institutional demand, adding a layer of structural support.

Volatility Expectations and Downside Risks

Despite the bullish positioning, volatility remains a double-edged sword. Thirty-day implied volatility for Bitcoin climbed toward 45%, with a skew of -5%, reflecting lingering bearish positioning at $85,000 strike levels. Traders are pricing in repositioning flows ahead of key catalysts, including the MSCI decision in January 2026, which could trigger further volatility.

The post-expiry environment also revealed a transition from deleveraging to selective re-risking. Improved liquidity and reduced profit-taking pressure suggest a stabilization phase, but the market remains vulnerable to shocks if prices test critical strike levels according to Glassnode insights. For Ethereum, the path is less defined, with its max pain level at $2,950 acting as a near-term floor.

Conclusion: A Cautious Bull Case

The Q1 2026 options expiry has crystallized a market narrative of cautious optimism. While bullish positioning and strategic realignment toward longer-term targets indicate confidence in a recovery, volatility risks and residual bearish exposure at key levels cannot be ignored. Traders must balance the potential for upside participation with the need for disciplined risk management, particularly as macroeconomic and regulatory catalysts continue to shape the landscape.

As the market digests this expiry, the focus will shift to how effectively these realigned positions hold against emerging catalysts-a test of both conviction and adaptability in a rapidly evolving crypto ecosystem.