Traders searching for clues on whether Bitcoin's rally can continue have shifted their focus to an unmissable event in the derivatives market: the quarterly expiration of options contracts worth roughly $15 billion.

On the Deribit platform, more than one-third of the Bitcoin options open interest expiring on Friday is tied to the September 25 expiry date. The put-to-call ratio stands at 0.70, indicating the market leans toward further price gains. The most concentrated call strike prices are $85,000, $90,000, and $100,000. Bitcoin is currently trading near $84,000, well above the so-called "max pain" level of $76,000 鈥?the price at which most options expire worthless. This has traders watching closely whether hedging activity around large call positions could dampen the market before Friday's settlement.

Options positioning tends to temporarily suppress price gains

Dealers are generally neutral on the current price, but their positioning may prompt them to sell as Bitcoin rises toward $90,000 to $95,000 in order to maintain hedge balance, potentially capping the rally before options expire. "So hedging activity could suppress the upside ahead of expiry, and once these options expire or roll into the next quarterly expiry, upward momentum may resume," said Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets.

The turning point in the options market

The turning point in the options market came after Bitcoin began a strong rally in August, when the U.S. Treasury's announced buyback program pushed up prices across most risk assets. Since then, Bitcoin has climbed more than 30%. This followed last week's record options expiry for BlackRock's iShares Bitcoin Trust (IBIT). According to Mauricio Di Bartolomeo, co-founder of crypto lender Ledn, those contracts were heavily skewed toward call options, and Bitcoin's rise made many of them profitable, forcing dealers who sold options to buy IBIT shares to hedge their exposure. He said this buying effect could transmit to the underlying cryptocurrency as new ETF shares are created.

If Bitcoin continues to climb into areas with large options exposure, Friday's Deribit expiry could produce a similar effect. Di Bartolomeo said, "Crypto-native expiries inherit this mechanism. If the trend persists, the same dynamic could play out on Deribit's options book with the large call trades at $85,000 and $100,000."

Some traders are already looking past Friday

Some traders have already begun positioning for what comes after Friday. Jake Ostrovskis, head of over-the-counter trading at Wintermute, said traders are shifting positions to later expiries, with many choosing to buy Bitcoin calls expiring in October and December with strike prices between $95,000 and $100,000. Some longer-dated contracts even extend to March 2027 with a strike price of $150,000. However, the size of expiring contracts alone cannot determine Bitcoin's future direction. Oliver Carding, head of marketing at Tesseract Group, said it remains unclear who holds the short positions in these contracts. "I would treat the expiry as an event for adjusting and rolling positions, rather than something that determines direction," he said.