$27 billion in cryptocurrency options will expire on Christmas Day! Traders are betting on a "Christmas Rebound," can BTC rise to $96,000?

As the end of the year approaches, the crypto derivatives market is undergoing an unprecedented “structural reset.” On December 26 (Boxing Day), the world's largest crypto assets options exchange Deribit will have options contracts for Bitcoin and Ether worth up to $27 billion expiring, with Bitcoin options accounting for $23.6 billion and Ether options for $3.8 billion. This expiration involves over 50% of Deribit's total open interest, and the market shows a clear bullish bias, with the put-call ratio dropping to as low as 0.38.

At the same time, institutions like Matrixport show that the sentiment of options traders has shifted from extremely bearish to “slightly bullish” for the first time since the sharp fall in October, with key indicator 25-Delta skew starting to rebound. This series of signs, combined with the thin liquidity characteristic at the end of the year, provides a prelude for the long-awaited “Santa Claus rally” in the market, while the $96,000 “maximum pain point” price of Bitcoin will become the focus of today's bull-bear battle.

Market Sentiment Shifts: Delta Skew Reveals Traders' “Cautiously Bullish” Mindset

After several months of sluggishness, the sentiment balance in the crypto options market has finally shown a subtle but noteworthy shift. According to an analysis report released by Matrixport on December 22, the 25-Delta skew values for Bitcoin and Ethereum have recently seen a slight increase. This professional indicator is a key thermometer for measuring market panic sentiment: when the skew value is negative and continues to decline, it indicates strong demand for bearish options, with traders willing to pay higher premiums to guard against downside risks, which is a typical bear market signal. Since late August, the skew values for both have been deeply entrenched in the negative range, particularly reaching a low point during the market's deep correction in mid-November.

However, after the market gradually digests the impact of the Bank of Japan's interest rate hike and U.S. macro events, accompanied by a temporary stabilization of price trends, this skew has received a “modest lift”. Although the absolute value is still below zero, the change in direction is significant. It marks the first time since the crypto market flash crash on October 10 that options traders are no longer seeking bearish protection in a one-sided and frenzied manner, but rather beginning to allocate a portion of their risk budget for potential price upside. This change is often interpreted as an early signal of market sentiment transitioning from “extreme fear” to “cautious optimism”. Matrixport particularly points out that the skew for Bitcoin has previously been more pessimistic than that for Ethereum, reflecting that when the market is under pressure, funds are more inclined to seek refuge in the largest market capitalization assets.

This shift in sentiment is not unfounded, as it is supported by another aspect of market microstructure—the put-call ratio. In the massive contracts nearing expiration on Deribit, this ratio is only 0.38. This means that for every 38 put options in the market, there are corresponding 100 call options. The nearly 3:1 disparity clearly illustrates the mainstream actions of traders for the rest of the year: chasing upward gains by purchasing call options. Most of the open contracts are concentrated in the strike price range of $100,000 to $116,000, while the most popular downside protection is set at $85,000. This distribution of positions itself creates an asymmetric risk-reward structure, providing potential “fuel” for any upward price movements.

Christmas Day Shock: How the $27 Billion Options Contract Expiry Affects Market Direction

All eyes in the market are focused on Deribit's settlement engine today. This options contract, with a notional value of 27 billion dollars, is destined to have a profound impact on market structure due to its large scale (accounting for more than half of all open positions) and the special timing (a low liquidity period at year-end). To understand its impact, one must start with two core concepts: “maximum pain” and “gamma squeeze.”

The “maximum pain” theory is a popular analytical tool in the options market. It refers to the price of the underlying asset at expiration that would cause the majority of option buyers to suffer the maximum loss (and the sellers to gain the maximum profit). According to data provided by Sidrah Fariq, Global Head of Retail Sales and Business Development at Deribit, the maximum pain price for this Bitcoin options is around $96,000, while for Ethereum it is around $3,100. Analysts supporting this theory believe that market makers and large institutions (typically net sellers of options) are motivated to push the price towards the maximum pain level before expiration through buying and selling the spot in order to maximize their own profits and minimize hedging costs. It's like a “magnet” that creates attraction as the expiration date approaches.

Key data overview for this Deribit options expiration

• Total Expiration Value: 27 billion USD (Bitcoin 23.6 billion + Ethereum 3.8 billion)
• Proportion of total open contracts: over 50%
• Market sentiment tendency: significantly bullish (bearish to bullish ratio 0.38)
• Bitcoin's biggest pain point: about $96,000
• Ethereum's biggest pain point: about $3,100
• Main bullish position range: Bitcoin $100,000 - $116,000; Ethereum $3,200 - $3,500

However, the market impact goes far beyond a static “pain point” price. A more dynamic mechanism comes from “gamma” risk. Gamma measures the rate of change of the options Delta value (sensitivity to changes in the underlying price) itself. When the price approaches the concentrated strike prices of a large number of options contracts (for example, Bitcoin's $90,000 and $95,000), market makers, in order to maintain Delta neutrality, will shift their hedging operations from a “low gamma” state of mild buying and selling to a “high gamma” state of intense, reverse operations. This may amplify price fluctuations in the short term, causing prices to oscillate rapidly between key strike prices like a “pinball.” As positions worth $27 billion today are closed or rolled over, this gamma effect could be magnified, especially in a holiday period with insufficient market liquidity.

It is worth noting that despite the large scale, this expiration may be more “orderly” than last year. Deribit's Bitcoin volatility index DVOL has fallen from a high of 63% on November 21 to around 45% currently, indicating that market panic is subsiding and traders do not expect the expiration to bring significant unexpected volatility. Many originally bearish options priced between $70,000 and $85,000 have been rolled over to January, which has somewhat reduced immediate downward pressure.

Can the “Christmas rebound” arrive as scheduled? Signals from technical analysis and on-chain data

As the options market experiences undercurrents, discussions about the year-end “Christmas rally” are heating up again. This seasonal pattern refers to asset prices often performing positively during the last week of December and the first two weeks of January. On-chain analyst Axel Adler Jr. believes that the current macro backdrop poses “no obvious obstacles” to Bitcoin staging this scene. Technical analysis also provides some support for the bulls.

From on-chain data, the Bitcoin Regime Score is currently in the bullish zone, although strong upward momentum has yet to be confirmed. This indicator assesses which stage the market is in (such as accumulation, rising, distribution, falling) by combining price trends, market volatility, and on-chain activity. Meanwhile, the recent frequent liquidation of short positions has created asymmetric favorable conditions for buyers: even a slight rise in price may trigger a chain liquidation, thereby accelerating the upward process.

Technical analyst Daan Crypto Trades pointed out that the price of Bitcoin is currently holding at a crucial long-term support level - the 0.382 Fibonacci retracement of the entire cycle's rise. For long-term bullish investors, defending this area is critical. Holding this support means that the adjustment since October may just be a healthy pullback, laying the foundation for subsequent rises; losing this support could open up deeper downward space and shake the bullish market structure.

The short-term price performance also reveals some warmth. In the past 24 hours, the price of Bitcoin has risen by about 1%, trading around $89,700, with trading volume surging over 70%; Ethereum also rose by 1%, returning above $3,000, with trading volume skyrocketing by 92%. A rise in both volume and price is usually a positive signal for the sustainability of a rebound. However, experts also remind that considering the overall market cycle, the crypto market is still in the early bear market phase or deep consolidation period, and any rebound may face severe tests. Therefore, the so-called “Santa Claus rally” is more likely to be a technical, event-driven rebound, rather than the starting point of a new bull market.

Market Outlook: Market Logic and Operation Strategies After Options Delivery

After today's peak in options, how will the market logic evolve? For investors, understanding and predicting this evolution is crucial. First, the massive expiration of options itself is a release of risk and a reset of positions. Whether bullish or bearish positions, they will disappear from the books after settlement, and market makers' corresponding hedge positions will also be lifted. This may free the market from some of the “distortion” caused by derivatives, and price drivers will more return to the fundamentals such as spot supply and demand, macroeconomic sentiment, and so on.

On an operational level, investors need to pay attention to two subsequent nodes: first is the annual closing price. Many funds and institutions base their performance evaluation and rebalancing on the annual closing price, so the price on December 31 often carries significant psychological and technical meaning. The second is the expiration of options in January. As Fariq from Deribit pointed out, traders rolling over the December put options to January means that some downside risk is being postponed. The options market structure in January will reflect traders' true expectations for the new year's start.

Looking ahead to early 2026, the market may face a turning point: will it continue the current consolidation at key support levels, or will it take advantage of improved sentiment to initiate a decent rebound? This largely depends on two factors: first, whether the capital flow of spot ETFs can reverse the ongoing net outflow trend that has persisted for months and bring in new funds; second, whether macroeconomic data (especially inflation and employment data) will strengthen or weaken the market's expectations for the Federal Reserve to cut interest rates in 2026.

For ordinary investors, the strategy in the current environment should focus on “cautious observation, key position decision-making.” In the potential volatility triggered by the 27 billion USD options Delivery, avoid blindly chasing rises and falls. Close attention can be paid to Bitcoin's reaction to the 96,000 USD “maximum pain point” position, as well as whether it can effectively break through and stabilize above the 90,000 USD psychological barrier. For Ethereum, the contest at the 3,000 USD level and the 3,100 USD maximum pain point level are the main observation points. After the options market completes this “annual reset,” a clearer new year trading picture, less disturbed by derivation, may soon unfold.