The crypto market is focused on Friday's massive Bitcoin options expiry on Deribit. $8.5 billion in Bitcoin options and $1.3 billion in Ether options will expire at 8:00 UTC, totaling roughly $9.8 billion in notional value. Each contract represents one BTC or one ETH.
Put-Call Ratio of 0.56 Points to Month-End Bullishness
Traders maintain a bullish stance heading into the expiry. Sidrah Fariq, Deribit's global head of retail sales and business development, told CoinDesk the put-call ratio for this expiry stands at 0.56, indicating overall positioning remains skewed toward bullish calls. This suggests traders expected strong price action in January, though Bitcoin has gained only 2% this month.
Wednesday's Fed rate decision could improve month-end performance if it signals further liquidity easing. Like tech stocks, Bitcoin tends to benefit from low rates and accommodative policy.
Downside Protection Buying Concentrated at Jan 30 Strikes
Not everyone is all-in bullish. Fariq noted heavy use of put diagonal calendar spreads alongside concentrated downside activity at the Jan 30 strikes. Over the last 24 hours, $88,000 and $85,000 Bitcoin puts attracted notable interest. This hedging activity suggests traders are preparing for near-term volatility around macro events rather than betting on a policy-driven sell-off.
Hedging Ahead of the Fed Decision
Markets broadly expect the Fed to hold rates steady, but uncertainty persists. Traders purchase put options as insurance against a potential hawkish surprise. Fariq explained these put buys are aimed at hedging volatility risk around the event day, not positioning for a policy-driven downturn.
After Friday's expiry, a new monthly cycle begins. The simultaneous expiration of $8.5B Bitcoin and $1.3B Ether options could trigger short-term price swings. Traders should monitor how the unwind of positions affects spot markets.