Traders eye $16B Bitcoin options expiry for rally clues

Every few months, the crypto derivatives market holds what amounts to a stress test for Bitcoin’s price. On September 25, that test arrives in force, with roughly $15.9 billion in Bitcoin options and another $2.1 billion in Ethereum options set to expire on Deribit at 8:00 UTC. It is one of the largest quarterly settlements of the year, and the outcome will tell traders a great deal about whether the current rally is structurally sound or mostly a product of dealer hedging flows that evaporate the moment the contracts clear. The numbers behind this expiry are worth sitting with for a moment. The $15.9 billion figure represents approximately 37% of Deribit’s total Bitcoin open interest, which currently sits at an estimated $43.5 billion. The bullish setup and its fine print Positioning heading into the settlement skews decidedly optimistic. The put/call open interest ratio on the expiring contracts ranges from 0.69 to 0.76, meaning traders have built up considerably more upside bets than downside protection. Of the $9.4 billion in call options scheduled to expire, roughly 55% are currently in the money, given that Bitcoin has been trading between approximately $85,000 and $86,300. T...