$31 Billion in Bitcoin Options Set to Expire – Analysts Warn of Halloween Volatility

The Bitcoin derivatives market is heading into one of its most significant moments of the year, with an estimated $31 billion in options contracts set to expire on Halloween.

Analysts say the size of this expiry could inject renewed turbulence into an already fragile market still recovering from the sharp flash crash earlier this month.

That early October selloff, which erased about $19 billion in leveraged positions, cut open interest in Bitcoin options from roughly $38 billion to $31 billion – the steepest weekly drop since June, according to Bitfinex analysts. Despite that, overall activity in the derivatives market has continued to climb, hinting that traders are once again building aggressive positions.

Deribit and CME Lead the Charge

Crypto exchange Deribit, which was acquired by Coinbase this year, holds the largest share of these expiring contracts – about $14 billion worth. The Chicago Mercantile Exchange (CME) follows closely with another $13.5 billion in outstanding Bitcoin options due next week.
Deribit’s chief commercial officer said the exchange has hit a new milestone, with open interest now exceeding $50 billion across more than 450,000 active contracts – more than double the levels seen at the start of 2024. He noted a heavy build-up of put options around the $100,000 strike, signaling bets on a potential decline, while a similar cluster of call options near $120,000 suggests some traders are eyeing a rebound or heightened volatility.

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Historically, large option expiries have tended to keep volatility muted before the event and then trigger sharper price swings in the days that follow. Analysts warn that even after October’s deleveraging, leverage in the system remains high – meaning that if prices start to slide, another wave of forced liquidations could unfold.

Such cascade events occur when leveraged long positions are liquidated in rapid succession, each triggering the next as prices fall and liquidity dries up.

Macro Factors Add Pressure

Beyond the derivatives market, traders are also watching U.S. macro data and monetary policy. The Consumer Price Index report, delayed by the government shutdown, has just been released, while attention now turns to next week’s Federal Open Market Committee (FOMC) meeting. Markets are pricing in a 97% probability of another rate cut, according to the CME FedWatch Tool.

ETF flows have mirrored the shifting sentiment. After strong $2.7 billion inflows in early October, the market saw $1.2 billion outflows following the mid-month liquidation wave. This week, inflows have stabilized, with Bitcoin funds drawing about $356 million, data from Farside Investors show.

With so many derivatives expiring at once, and macro conditions still uncertain, traders are bracing for another volatile stretch — one that could decide whether Bitcoin’s next big move is up or down.