Bitcoin options expiration wave triggers volatility; key price levels test market direction

Last December, a major options expiration event shook the cryptocurrency market. At that time, Bitcoin’s price experienced intense volatility just before options settlement, soaring from $88,500 to over $89,100 within a few days. Although the increase seemed moderate, the options expiration effect behind it profoundly influenced market sentiment and trading strategies. Now, entering the first quarter of 2026, similar options-driven volatility remains a key focus for investors.

Pre-Expiration Bitcoin Price Shows Strong Momentum

Renowned crypto analyst Ardi provided an in-depth analysis of the market at that time. He pointed out that Bitcoin’s surge past $89,100 was primarily driven by a large-scale short covering. According to Ardi, when shorts began to close positions, massive stop-loss and forced liquidation orders flooded the market, creating a rapid upward wave.

But more importantly, the second wave of upward movement demonstrated genuine buying momentum. Heavy-volume buyers entered the market as the price broke through local resistance levels. Bitcoin’s daily trading volume surged 36% to $30 billion, reflecting a shift in market sentiment from cautious to optimistic. This increase in volume often signals a potential new trend phase.

Short Covering vs. Genuine Buying: The Core Difference in Two Rallies

Distinguishing between these two upward waves is crucial for understanding market dynamics. The first rally, though rapid, was essentially passive buying—shorts forced to close to avoid risk. This type of buying is short-term; once target prices are reached, buying pressure diminishes.

In contrast, the second rally was more aggressive. Active participation by high-volume buyers indicates a new bullish consensus forming in the market. Such genuine buying tends to be more sustainable, supporting longer-lasting price trends. Therefore, analysts generally see the second wave as more significant and worth close attention.

Technical Outlook: $94,000 as a Key Resistance Level

While prices briefly spiked higher, Ardi cautioned traders to remain vigilant. He believes the current rally has not yet confirmed a sustained bullish reversal. The real confirmation would be Bitcoin reclaiming $94,000. Only a breakout above this technical level could shift the market sentiment from sideways to bullish.

Until then, short-term pullbacks remain possible. This assessment is vital for traders planning entry points—chasing blindly could lead to being caught in a short-term correction.

Meanwhile, analyst Daan Crypto Trades noted that Bitcoin is entering a price compression phase. He observed that lows are gradually rising, and the 4-hour moving averages are forming resistance. Such tightening price action often foreshadows a significant directional move. Based on his analysis, a 5-10% volatile move could occur soon.

Key Options Expiration Sparks Volatility Spike

Understanding the surge in volatility requires looking back at the core mechanism: options expiration. At that time, about $28 billion worth of Bitcoin options were nearing settlement. Large-scale expiration events typically prompt traders to rebalance positions, causing liquidity to cluster at certain price levels. This can amplify volatility in both directions—up or down.

According to Deribit data, implied volatility reached relatively high levels before this expiration, confirming the profound impact of options settlement on market volatility. This serves as a reminder for investors to monitor not only price trends but also structural factors like options expiry dates.

January’s Price Action Will Shape the Next Major Trend

Looking ahead, Daan Crypto Trades emphasized that January will be critical in determining Bitcoin’s future trend. His technical analysis suggests:

• If Bitcoin can sustain a breakout above $94,000, the market could push toward $100,000 or higher. This aligns with Ardi’s view that $94,000 is a key battleground for bulls and bears.

• Conversely, if the price falls below $80,000, the outlook turns bearish. Investors should prepare for deeper corrections in that scenario.

Current Market Status: Reassessing Upside Potential

As of mid-March 2026, Bitcoin trades at $69,170, down about 1.91% in 24 hours. Its market cap stands at $1.38 trillion, with an average daily trading volume of around $97.7 billion. Compared to the December high of $89,100, the market has experienced a significant correction.

This pullback offers new opportunities for investors. Reviewing the volatility around last year’s options expiry and subsequent market developments reveals that the market did not continue to break higher as some analysts predicted. Instead, after months of subdued activity, the market is now re-accumulating momentum for the next move.

Options Expiry as a Market Warning Signal

Large-scale options expiration impacts the market beyond short-term price swings, notably altering liquidity structures. When hundreds of billions of dollars in options settle simultaneously, collective trader actions can push volatility higher, leading to sharp price swings.

Investors should pay attention to: first, the expiration date; second, distinguishing between passive unwinding and active buying; and third, preparing for key technical levels like $94,000—rather than blindly chasing highs.

Ultimately, the market’s future depends on whether Bitcoin can break through key resistance levels and whether genuine buying interest persists. Volatility driven by options expiry is only a surface phenomenon; underlying demand and structural shifts are what truly determine long-term trends.