Hedging restrictions lifted! Bitcoin options large expiration pushes it back to the $90,000 level

At the beginning of the year, a massive options settlement event shook the Bitcoin market. Bitcoin options contracts worth $1.81 billion settled simultaneously, causing intense price fluctuations near the psychological level of $90,000. This event revealed the close connection between the derivatives market and the spot market, as well as the significant constraining effect of hedging positions on price movements.

Chain Reaction of Options Expiry: How $1.8 Billion Positions Stir the Market

As options contracts approach settlement, the hedge positions accumulated in the market begin to reveal their true nature. According to data from crypto options exchange Deribit, the expiring contracts had a put/call ratio of 0.74, with the maximum pain point set at $92,000. These figures reflect traders’ concerns about volatility; they hedge to protect against potential losses, but in doing so, they also unconsciously impose constraints on the spot market.

The strike prices are densely concentrated around specific levels, making the spot market extremely sensitive before and after expiry. Even small price changes can be amplified in the derivatives market, which then feeds back into spot trading. This structural tension maintains a fragile market balance until the options finally expire.

Downward Pressure Under Hedging Constraints: ETF Redemptions and Global Panic

On the night before options expiry, Bitcoin faced pressure from multiple directions. Spot Bitcoin ETF outflows continued, with $32 million withdrawn that day—marking the fourth consecutive day of redemptions. This ongoing capital outflow reflects shaken investor confidence.

Global market instability further fueled this panic. Turmoil in the Japanese bond market spilled over into U.S. Treasuries, and the “extreme fear” sentiment spread into the crypto space. Facing macro uncertainties, investors reduced risk assets, with Bitcoin, as a high-risk asset, bearing the brunt. The price quickly dropped from near $90,000 to $88,800, then briefly rebounded to $89,500 before selling pressure reemerged, dragging the price back to around $88,700.

This repeated downward movement essentially represents the gradual accumulation of hedge constraints: short hedgers in the market kept increasing their positions, continuously suppressing upward potential.

Sudden Release of Hedge Constraints: Massive Short Covering Triggers Rebound

The moment of options settlement became a turning point. When contracts officially settled, the previously maintained hedge positions lost their counterparts, suddenly releasing the accumulated constraints. This moment was precisely when short positions became vulnerable.

Market data clearly recorded this shift. In just four hours, short positions were liquidated for $83 million, while long liquidations during the same period totaled only $8 million. The stark difference indicates that short traders rushed to close their positions—possibly triggered by stop-losses or the disappearance of hedging needs, locking in profits.

Regardless of the reason, this $83 million short covering generated strong upward momentum. Each short liquidation meant a buy order entering the market, pushing Bitcoin’s price higher.

From $88,700 to $90,745 Breakthrough

With hedge constraints lifted and massive short covering, Bitcoin demonstrated a strong rebound. The price broke through the critical psychological level of $90,000, restoring and surpassing a market cap of $1.8 trillion. This upward movement essentially reflects the market releasing stored energy from its suppressed state.

Based on data at the time, Bitcoin’s trading price eventually rose to about $90,745. This level surpassed the pressure zone indicated by the maximum pain point of $92,000, which was associated with the accumulated hedge positions. Market participants began to see a new opportunity: now that hedge constraints were lifted, testing $91,000 or even higher seemed possible.

Deep Impact of Derivatives Market on Spot Price Movements

This event provides a vivid example of how options expiry can rapidly change market dynamics. Hedge constraints are not just abstract concepts—they directly manifest as price pressures and trading behaviors. When constraints exist, the market appears dull and suppressed; when they are released, the pent-up energy is unleashed instantly.

Deribit noted at the time that geopolitical and trade policy uncertainties remain significant macro factors, continuously supporting hedge demand and maintaining market volatility. In other words, as long as external risks persist, investors will continue to need hedging tools, which in turn sustain the constraints on the market.

Market Insights Today

For traders, understanding the relationship between hedge constraints and options expiry is crucial. Large options expiries are not just technical events—they are concentrated displays of market structural forces. By monitoring data from exchanges like Deribit, investors can identify levels where hedge constraints are likely to cause volatility, preparing for potential sharp swings.

From a macro perspective, Bitcoin’s market is increasingly interconnected with global macroeconomic conditions. Turmoil in the Japanese bond market can influence crypto prices, indicating that Bitcoin is gradually integrated into the global financial system and is no longer an isolated asset class. The formation and release of hedge constraints reflect not only internal market structures but also global risk sentiment.

Currently, Bitcoin trades at around $70,150 (latest data as of March 2026). Compared to previous price movements, the market has gone through multiple cycles. However, the core concept of hedge constraints remains vital—it is still a key to understanding cryptocurrency market volatility.