Bitcoin market risks before and after expiration: Why volatility often surges at these critical moments

Historical Options Expiration Events Review: A Regular Market Phenomenon

From the end of 2023 to early 2025, the Bitcoin options market has experienced multiple large-scale expiration events. The annual expiration on December 29, 2023, was approximately $1.1 billion, while this year’s super annual expiration on December 26, 2024, reached $2.36 billion, doubling in size. Around these expiration dates, the market exhibits a remarkable pattern: volatility is often suppressed before expiration and then released significantly afterward.

Suppression and Breakouts: The “Cage” Effect Caused by Gamma Hedging

Before each major expiration, the gamma hedging mechanism in the market produces a unique phenomenon. During the December 29, 2023 event, Bitcoin was trapped in the $42,000–$43,000 range, showing clear sideways oscillation. A similar situation occurred before the June 28, 2024 options expiration, when the price near $60,000 faced heavy selling pressure. During these periods, traders often observe a counterintuitive market behavior — despite strong fundamentals, prices remain tightly suppressed.

Analysts point out that this suppression is often accompanied by liquidity contraction. The quiet trading during the Christmas holiday and the low liquidity environment during the August 29, 2025 holiday period both reinforce this effect. When the gamma trap intensifies, trading volume drops significantly, and market participants face a seemingly “frozen” situation.

Post-Release Accelerated Rise: The Regularity of Market Rebounds

What happens after expiration events? Data shows an almost consistent pattern. After the March 29, 2024 options expiration, Bitcoin quickly rose from the $65,000 region to over $70,000, with a bullish trend leading up to the halving event. Following the September 27 expiration, driven by expectations of Fed rate cuts, the market rebounded from around $60,000 to near $70,000.

Most notably, the performance on December 27, 2024, was impressive: the annual expiration reached $1.98 billion, and after expiration, Bitcoin broke through the $80,000 mark, sparking a Christmas market rally. The expiration on March 28, 2025, also delivered a strong push from $85,000 toward $100,000.

Current Moment: The Market Dilemma and Expectations Before the $2.36 Billion Large Expiration

The super annual expiration on December 26, 2025, reached a record scale of $2.36 billion, with the highest pain point at $96,000. Against the backdrop of liquidity drying up during the Christmas holiday, Bitcoin oscillates repeatedly between $85,000 and $90,000. The powerful gamma hedging mechanism locks the market within a relatively narrow range, artificially suppressing volatility.

Based on historical experience, this suppression state is about to end. Analysts expect that as the expiration date approaches and passes, the “market cage” will disappear, and volatility will surge dramatically. Some institutions believe that breaking through the $90,000–$100,000 range is not only possible but may also mark the start of the new year.

Why Does This Pattern Recur Frequently?

This cyclical phenomenon is not accidental. The gamma hedging mechanism of options determines that when long call options accumulate to a certain scale, sellers hedge by continuously adjusting their delta positions, ultimately creating maximum pressure near the strike price. When the expiration date ends, these hedging positions are closed, and the market’s “artificial constraints” vanish.

Additionally, liquidity factors — during holidays like Christmas and Chinese New Year, trading is light, and large capital inflows and outflows are limited, further strengthening this effect. However, after the holidays, large amounts of capital re-enter the market, creating strong rebound momentum.

Conclusion: Volatility Release as a Natural Market Law

From an options scale of $1.1 billion to $2.36 billion, the logic of Bitcoin market behavior remains unchanged: suppression before expiration, liberation afterward. This cycle often results in a one-sided market, which presents trading opportunities. Currently, as large expirations approach and are about to pass, market participants should prepare for potential volatility surges and directional breakthroughs.