Bitcoin (BTC) plunged early this month to nearly $60,000, wiping out large chunks of value across the crypto market and vaporizing some trading funds. Most observers pinned the slide on macro forces, including the capitulation of spot ETF holders (and potential rumors of funds blowing out their positions). Yet another, quieter force, one that typically keeps trading running smoothly, likely played a major role in crashing the spot price lower. That force is the market makers, or dealers, who continuousl ...

Crypto traders are leaning bullish while simultaneously chasing downside protection ahead of Friday's bitcoin (BTC) options deadline worth billions of dollars. Bitcoin options worth $8.5 billion will expire on Deribit at 8:00 UTC on Friday, the world's largest crypto exchange by trading volume and open positions. These figures represent the U.S. dollar notional value of active options contracts at press time, with each contract corresponding to one BTC or one ETH. Since the 2020 COVID crash, options mar ...

Core Insights - Bitcoin is transitioning from a speculative asset to a mature financial asset, with institutional investors increasingly gaining exposure [1][2] - Bitcoin is now categorized alongside high-growth technology stocks and speculative commodities, indicating its behavior as a macro proxy for growth, risk appetite, and volatility [2] Institutional Participation - Institutions are shifting from direct buying and selling of Bitcoin to using options for expressing views on its price and volatility, marking a significant maturation in its trading [3] - The evolution of Bitcoin's trading mirrors that of equities and commodities, moving towards structured strategies that manage volatility and macro risk [3] Market Dynamics - The growth of Bitcoin's options markets is influencing spot prices, with hedging around key price levels becoming more prevalent [4] - Increased institutional participation has led to a moderation in Bitcoin's volatility profile, with tighter spreads and deeper liquidity contributing to market stability [4] Trading Strategies - Institutional strategies such as basis trades, covered calls, and structured hedges are becoming more common, reflecting Bitcoin's status as a risk asset within diversified portfolios [4][5] - Since January 2024, options volume on exchanges like OKX has surged by over 85%, highlighting the rapid shift in trading dynamics [5] Market Structure Evolution - The definition of success for exchanges is evolving, focusing on the ability to support risk markets rather than just spot volumes or retail sign-ups [6] - Key metrics for growth now include deep options liquidity, institutional-grade margining, and robust risk controls, enabling traders to manage structured positions effectively [6]

Market Overview - Bitcoin (BTC) has been trading in a narrow range of $80,000 to $95,000 since November, with options becoming the largest segment of the derivatives market, indicating a maturing market for the cryptocurrency [1] - Aggregate bitcoin options open interest is at $65 billion, surpassing futures open interest at $60 billion, a trend that has been consistent since July 2025 [1] Options Market Dynamics - Options are favored by institutional investors for hedging and volatility strategies, contributing to more stable market conditions, marking a shift from leverage-driven speculation to risk management [2] - In October, bitcoin reached a record high of $126,000, with options open interest peaking at nearly $120 billion before declining due to contract expiries, while bitcoin's price fell by 35% [3] Dominance of IBIT - The bitcoin options market is increasingly dominated by BlackRock's iShares Bitcoin Trust ETF (IBIT), which accounts for approximately $33 billion in options open interest, representing 52% of the total market [4] - IBIT options began trading in November 2024, and Nasdaq ISE has requested to increase position limits from 250,000 contracts to 1 million, indicating strong institutional demand [4] Competitive Landscape - Following the debut of IBIT options, Deribit has seen its market share decline, with current options open interest at around $26 billion, down from approximately $43 billion before year-end expiries, reducing its dominance from over 90% five years ago to below 39% [5] - Bullish Exchange has surpassed $3 billion in notional bitcoin options open interest within a few months of trading, now ranking second in bitcoin options trading, having overtaken platforms like OKX, Binance, and CME [6]

Core Insights - Bitcoin and Ethereum options worth over $2.2 billion are set to expire, creating a pre-expiry standoff in the market [1][2] - Bitcoin is trading near its max pain level of $90,000, while Ethereum is slightly above its max pain level of $3,100, indicating a tight trading range [2] - The options market for Bitcoin shows a balanced position with a put-to-call ratio of 1.05, while Ethereum's options indicate a more bullish sentiment with a put-to-call ratio of 0.87 [3][4] Options Market Dynamics - Bitcoin's options market has 10,105 call contracts against 10,633 put contracts, suggesting a balanced outlook [3] - Ethereum's options show a concentration of call positions above $3,000, indicating potential for upward movement if the price holds above max pain [4][5] - Analysts suggest that volatility may compress into the expiry, with significant directional movement expected post-expiry [5][6] Macro Economic Factors - The upcoming US employment report is a key macro catalyst, with expectations of 73,000 nonfarm payroll jobs, which could impact market sentiment [7][8] - The US dollar has strengthened, with the DXY index up approximately 0.5% over the past week, negatively affecting non-yielding assets like Bitcoin and gold [7] - The anticipated employment data and dollar strength are contributing to a cautious market environment for cryptocurrencies [7]

Acquisition Analysis - Coinbase paid $29 billion (2.9B) for Deribit's $1 trillion (1T) annual derivatives volume [1] - The acquisition could potentially pay for itself in 3 years based on Deribit's take rates [1] Market Position - Deribit has $59 billion (59B) in open interest [1] - Deribit dominates 85% of the Bitcoin options market [1] Strategic Implications - The company is building infrastructure essential for tokenized asset launches [1] - The company's stock trades like an exchange [1]

Market Volatility - Market volatility has increased due to approximately $23 billion in Bitcoin options expiring next Friday [1] - This expiration accounts for over 50% of total open interest on Deribit [1] - The large option expiration could amplify price swings [1] Options Market - Thirty-day implied volatility has rebounded to nearly 45% [1] - Options skew around -5% indicates downside risk dominates market pricing [1]

Bitcoin's (BTC) derivatives market is flashing signals of stability in a broad range rather than a massive moonshot or violent crash. Activity in Deribit-listed options shows strong support around $85,000 from heavy put selling (writing) or traders offering insurance against price drops below that level. At the same time, some traders are offering protection against bullish price moves beyond $95,000-$100,000 levels by writing call options at these levels, thereby creating resistance, according to data ...

Core Viewpoint - Metaplanet, Japan's largest corporate Bitcoin holder, has secured a $130 million loan to purchase additional Bitcoin despite facing over $635 million in unrealized losses, indicating a strategic approach to leverage its Bitcoin reserves for growth and capital restructuring [1][2][3]. Group 1: Loan and Financial Strategy - The loan is part of a previously established $500 million credit facility and is fully secured by the company's Bitcoin reserves [1][2]. - Metaplanet currently holds 30,823 BTC, valued at approximately $2.7 billion, with an average acquisition cost of $108,070 per BTC, leading to a total cost basis of $3.33 billion [2]. - The company has an unrealized loss of $635.97 million, or -19.1%, as Bitcoin trades below its acquisition cost [2]. Group 2: Use of Funds and Business Strategy - Funds from the new loan will be directed towards accumulating additional Bitcoin, expanding the Bitcoin income generation business, and executing share repurchases when market conditions allow [3]. - The income business, which involves selling Bitcoin options, achieved record sales during the third quarter [4]. Group 3: Market Position and Risks - Metaplanet's strategy is framed as a calculated bet on Bitcoin's long-term strength, using BTC as a hedge against Japan's weakening yen [4]. - Critics warn that leveraging a volatile asset like Bitcoin could lead to forced sales in the event of a sharp price drop, which may trigger margin calls and liquidations [5]. - The company is restructuring its capital base and has introduced plans for two classes of preferred shares to raise capital while limiting shareholder dilution [6].

Core Insights - An institutional trader executed a significant options position of 20,000 BTC valued at $1.74 billion on Deribit, marking one of the largest single options trades of the year [1] - The trade employs a call condor structure, which profits if Bitcoin remains within a specific price range of $100,000 to $118,000, with maximum profit occurring between $106,000 and $112,000 at expiry [2] Market Impact - The whale's four strike prices dominate the December 26 expiry structure, with the $100,000 strike leading in open interest at 15,517 BTC, followed by $112,000 (14,062 BTC), $106,000 (13,090 BTC), and $118,000 (13,066 BTC), totaling over 55,000 BTC in open interest [3] - Current market sentiment favors calls over puts, with Bitcoin options showing 63% call dominance, comprising 375,267 BTC in calls versus 218,000 BTC in puts [4] Trade Dynamics - The trade requires Bitcoin to rally approximately 15% from its current level of around $87,000 to reach the lower profit zone of $100,000 by expiry [5] - The position has just over one month to play out, indicating a concentrated bet on near-term price action as the year-end approaches [6]