$2.85 billion options big test: Crypto options storm during the Christmas holiday

Christmas weekend, while the global financial markets are in holiday mode, the crypto market faces an unprecedented test. This Friday (December 26), over 3 million Bitcoin options contracts will expire simultaneously, with a notional value reaching $2.37 billion, accounting for more than half of the open interest on the world’s largest crypto options exchange. Even more astonishing, when including other cryptocurrencies like Ethereum, this collective settlement involves a total notional value of up to $2.85 billion—double the figure from the same period last year, and industry insiders are calling it “the largest scale ever.”

A Record-Breaking Number

From a historical perspective, the $2.85 billion single-day options settlement has become the new benchmark. Looking back at this year’s data reveals this crazy growth:

At the end of August, a $1.45 billion monthly settlement was dubbed the “largest of the year.” The “century gamble” in March, with a scale of about $1.43 billion, also drew widespread market attention. From $580 million to $1.43 billion and now to $2.85 billion, each new high continues to push market participants’ imagination of “scale.”

This surge in notional value reflects a deeper reality: the derivatives market is expanding exponentially, with retail and institutional investors participating through increasingly complex tools to engage in price speculation.

The “Perfect Storm” in Holiday Liquidity Vacuum

However, scale alone is not the determinant of risk; liquidity shortage is.

During the holiday window from Christmas to New Year, global capital markets are in hibernation. Traders are on vacation, institutions are closed, and trading volumes are sluggish—crypto markets at this time resemble a quiet river. In such an environment, even a medium-sized order can ripple through the market.

When a position with a notional value of $2.85 billion needs to find an exit in a market with poor liquidity, price pressure becomes inevitable. History shows that options expiration dates often trigger short-term volatility—this is not coincidence but a structural market inevitability.

“Maximum Pain”: The Market Manipulator’s Code Word

In the options world, there is a technical term called “maximum pain” (最大痛点), which is the key to understanding this settlement.

Maximum pain refers to the price level at which short option sellers stand to make the maximum profit and buyers suffer the greatest losses. This level is usually controlled by market makers and large hedge funds—they have the ability to influence market prices.

Historical data confirms this pattern: before August settlement, Bitcoin’s maximum pain was at $116,000; during the March “gamble,” it was at $85,000. In the hours leading up to options expiration, prices tend to be “drawn” toward this level—what appears to be manipulation is actually the natural result of millions of market participants dynamically hedging.

Short-term Storm and Long-term Divergence

This settlement could have dual effects:

In the short term, we should expect increased volatility. In a holiday environment with limited liquidity, a settlement of this magnitude is like pouring a tanker’s cargo into shallow waters—waves may splash far beyond expectations. Implied volatility (DVOL), options skew, and other technical indicators will fluctuate significantly before and after settlement.

In the medium to long term, the settlement itself does not determine trend direction but acts as a “stress test.” After large hedge positions are closed, the true supply-demand dynamics will surface. At that point, the market will reorient based on macro expectations, policy signals, and fundamental capital flow indicators.

Markers of Market Maturity and Hidden Concerns

Ironically, the $2.85 billion single-day settlement is both a warning and a proof—proof that the crypto derivatives market has entered a mature phase. Traditional giants like BlackRock and Fidelity are engaging with complex options strategies, CME continues to launch new Bitcoin derivatives—these all indicate that institutional investors are deeply involved.

But maturity does not mean stability. Every record high scale brings challenges to liquidity structures and microstructure of the market.

The holiday will pass, traders will return, liquidity will recover. By then, the technical volatility triggered by this $2.85 billion settlement will fade, and the market will refocus on the true drivers of long-term prices: macroeconomic expectations, regulatory developments, technological innovation, and capital cycles. After this “big wave” recedes, the surface will calm, but the underlying tidal forces will continue to shape the market’s new direction.