Interest is focused on the market as an $11 billion bitcoin options expiry nears, raising the possibility of increased short-term volatility.

Decript, a blockchain outlet, reported on Oct. 29 that the expiring positions total about 135,000 BTC, accounting for about one-third of open interest in Deribit’s bitcoin options.

The contracts set to expire include about 88,700 call options and about 46,500 put options. The put-to-call ratio is 0.52, meaning call options outnumber puts by about two to one.

The $11 billion figure is a notional value calculated at current prices and differs from the actual amount of money that will change hands. About 86 percent of contracts are out of the money, meaning exercising them would not be profitable. If they expire at these price levels, the actual settlement amount is estimated at about $130 million, or about 1 percent of the total notional value.

Another metric the market watches is the "max pain" price. Based on Deribit, the max pain price for this expiry is $78,000, about $3,500 below the current price. Deribit also said the figure is an indicator showing position distribution and does not predict the actual expiry price.

By strike, call options are most concentrated at $95,000 and $100,000. Those levels are about 16 percent and 23 percent above the current price, respectively. Put options are concentrated at $70,000, about 14 percent below the current price. Over the past 24 hours, trading volume for the contracts in this expiry exceeded 6,000, the highest among Deribit’s bitcoin options by expiry date.

The macroeconomic environment is also a variable. The U.S. Federal Reserve on Oct. 28 held its benchmark interest rate at 3.75 to 4.00 percent. The vote was 10-2, and the 2 dissenters supported a rate increase. The U.S. 10-year Treasury yield ended at 5.05 percent, and expectations in the market for an additional hike within the year strengthened. Higher rates can raise financing costs and returns on safe assets, potentially weighing on risk assets such as bitcoin.

This expiry is smaller than the $15 billion seen in March but about 70 percent larger than August’s $6.4 billion. It is about three times the $3.6 billion in April 2021. That has led to a view that this expiry could be a turning point for year-end position adjustments.

The next major expiry is on Dec. 25, with contracts planned at a similar size of about 135,500 BTC. As it comes about 2 weeks after the Fed meeting on Dec. 8 to 9, interest-rate expectations and supply-demand changes tied to options expiry could affect the market together.