Bitcoin News Today: Bitcoin Trapped by $23.8B Options as Expiry Looms, Volatility Expected

Bitcoin has entered its final days in a tightly defined trading range, oscillating between $85,000 and $90,000 without a clear breakout. Market participants are observing the effects of concentrated options activity, which has created artificial equilibrium in price movement. The current structure is set to shift when a $23.8 billion options expiry arrives in two days, potentially unlocking a new phase of volatility.

Derivatives data show that dealer gamma exposure-mechanical hedging from market makers-has overwhelmed other market flows. Specifically, dealer gamma dwarfs ETF activity on a daily basis. This imbalance has kept Bitcoin from reacting organically to bullish or bearish catalysts in recent weeks.

The forces pinning Bitcoin between $85,000 and $90,000 are structural rather than psychological. Call options at $90,000 force dealers to sell during rallies, while put options at $85,000 drive forced buying on dips. The result is a price range held in place by hedging mechanics rather than organic market demand.

The center of the dynamic lies around $88,000, where the so-called "gamma flip" level is located. Above this threshold, dealers short gamma must sell on upward moves and buy on dips to maintain delta neutrality, suppressing volatility. Below this threshold, the mechanics reverse, allowing volatility to expand rather than contract.

The $90,000 level has repeatedly acted as a ceiling due to heavy call option positioning. As Bitcoin approaches this price, dealers must sell to hedge their exposure, creating what appears to be natural sell pressure. Conversely, $85,000 has proven resilient as put option positioning compels dealers to buy Bitcoin when prices approach that level, absorbing selling pressure.

This artificial balance is reinforced by leveraged futures positions. Coinglass data show that liquidation heatmaps cluster around the same price levels. If Bitcoin breaks $90,000, short liquidations could fuel a buying cascade, while a drop below $86,000 would likely trigger long liquidations. These factors combine to keep Bitcoin in a defined corridor until the expiry.

The upcoming options expiry on December 26 is expected to be the largest in Bitcoin's history. Roughly 75% of the current gamma exposure is set to disappear after this event, effectively removing the mechanical forces that have restricted price movement. NoLimitGains notes that this expiry will remove 46% of dealer gamma exposure, ending the mechanical suppression that has trapped Bitcoin since mid-December.

This expiry also marks a turning point in institutional participation in Bitcoin derivatives. The $23.8 billion in notional value set to roll off reflects rapid growth in the derivatives markets compared to previous annual expiries, which totaled $6.1 billion in 2021, $11 billion in 2023, and $19.8 billion in 2024. The increasing size of these expiries shows rising confidence and liquidity in Bitcoin's derivatives ecosystem.

For traders, the next few days will be critical. If bulls can defend $85,000 through expiry, a breakout toward $100,000 becomes structurally possible. A breakdown below $85,000 in a low-gamma environment, however, could accelerate the price downward. Analysts caution that while the range-bound action reflects derivatives mechanics, not underlying market conviction, heightened volatility is likely in early 2026 as new positioning emerges.

Risks to the Outlook

A major risk lies in the potential for a sudden shift in positioning. If the expiry does not remove all expected gamma exposure or if new positioning quickly replaces it, the range could persist. Market participants are also monitoring for any regulatory developments or macroeconomic surprises that could disrupt the current dynamic.

The broader market remains cautious as other developments unfold. For instance, U.S. President Donald Trump has issued a statement pressuring the Federal Reserve, drawing attention to the likelihood of a rate decision at its upcoming meeting. While this is unrelated to Bitcoin's current range, it could influence risk appetite and volatility in the broader financial markets.

Bitcoin's current price behavior is a temporary phenomenon, driven by derivatives mechanics rather than fundamental shifts in the market. As the expiry nears, traders and investors are preparing for a potentially volatile transition period.