Traders are bracing themselves as the expiry date for a colossal amount of Bitcoin options fast approaches.
A total of $17 billion in digital assets options — more than $14.5 billion in Bitcoin — are set to expire on crypto derivatives platform Deribit on Friday.
“This is a huge expiry, large enough to influence spot prices,” Daniel Reis-Faria, CEO of ZeroStack, told DL News.
A Bitcoin options contract gives the trader the right, but not the obligation, to purchase the underlying asset at a specific price on a future date.
This means traders don’t have to buy the Bitcoin when the contract expires, but they can if they want to.
The expiry date falls on the same day that US President Trump set as the deadline for Iran to make a deal to end the ongoing military conflict between the two countries.
The president postponed a threat to bomb Iran’s power grid on Tuesday after he said he’d had productive talks with Iranian officials.
Iran has denied that such talks took place.
When options are set to expire, crypto markets can become more volatile as would-be traders will either continue to hold or dump their potential buys.
In the past, when large amounts of options have expired, the market has crashed.
This isn’t a given, however, as market makers can sometimes suppress volatility by selling option premiums.
War in Iran a factor
Things are different this time around, as crypto markets have experienced greater volatility amid geopolitical strife.
Deribit’s Chief Commercial Officer, Jean-David Pequignot, said in a note shared with DL News that the Iran war was playing a part in Friday’s option expiry.
“Bitcoin’s recent surge back toward $71k was catalysed by President Trump’s decision to postpone strikes on Iranian power plants for five days,” he wrote.
Bitcoin is up 8% since the US and Israel hit Iran on February 28.
The coin has experienced significant volatility, along with stocks, since the attack took place, but has proven to be a safer haven than gold — at least in the short-term.
Now, Trump’s decision to postpone strikes on Iranian power plants for five days will reach its deadline the same day the crypto options expire, which could mean even more volatility, according to Pequingnot.
“This diplomatic window expires almost perfectly in tandem with Friday’s options expiry, exacerbating a localised volatility kink in the term structure,” he added.
