Stock Market Soars as Bitcoin Holds Its Breath: Record Options Expiry Looms

Wall Street's party rages on while crypto traders watch the clock. A massive, record-setting options expiry for Bitcoin is about to hit the tape, freezing typical volatility in its tracks. The divergence tells a classic tale of two markets.

The Calm Before The (Potential) Storm

Forget the usual frenzy. Bitcoin's price action has gone eerily quiet, trapped in a tight range that has traders checking their calendars. The culprit? Billions in derivatives contracts set to expire simultaneously. This isn't just another Friday close—it's a liquidity event that has the entire ecosystem holding its breath, sidelining big moves until the dust settles.

Traditional Finance Charges Ahead, Unbothered

Meanwhile, the S&P and Nasdaq are doing their best rocket ship impressions, fueled by the usual cocktail of earnings optimism and speculative fervor. It's a stark reminder that when traditional finance gets a whiff of momentum, it rarely pauses to check if its digital cousin is keeping up—after all, why let blockchain uncertainty ruin a perfectly good rally?

The real test comes post-expiry. Will unlocked capital flood back into Bitcoin, playing catch-up? Or will the decoupling deepen, proving once again that in the short term, markets can celebrate entirely different realities? One thing's certain: by Monday, the excuses are gone, and the real price discovery begins. Get ready for volatility with a capital V.

TLDR

• Bitcoin fell below $88,000 on Monday after briefly climbing above $90,000 earlier in the trading session
• Over $28.5 billion in bitcoin and ether options are set to expire Friday on Deribit, marking the largest expiry in the exchange’s history
• The S&P 500 rose 0.6% while the Dow gained 228 points as Wall Street saw a broad rally to start the holiday-shortened week
• Traders are positioning defensively ahead of year-end, rolling December puts into January spreads between $80,000 and $75,000
• Crypto-related stocks showed mixed performance with Hut 8 up 16% while Strategy turned negative after earlier gains

Bitcoin continued its downward slide on Monday, falling below $88,000 after trading above $90,000 earlier in the day. ethereum also dropped back under $3,000 as crypto markets saw steady declines through the U.S. trading session.

The price moves come as traders prepare for Friday’s record-setting options expiration on Deribit. More than $28.5 billion in Bitcoin and ether options contracts are set to expire, representing over half of the exchange’s $52.2 billion in open interest.

Jean-David Pequignot, Deribit’s chief commercial officer, said this year-end expiry caps a year defined by institutional maturity. Bitcoin’s $96,000 level represents the “max pain” point where option writers WOULD benefit most from the expiry.

About $1.2 billion in open interest sits at the $85,000 strike price for put options. This concentration could push spot prices lower if selling pressure increases ahead of the expiry.

Traders have been rolling their positions forward rather than closing them out. There has been a shift from December puts at $85,000 to $70,000 into January put spreads between $80,000 and $75,000.

The defensive positioning suggests traders are covering immediate year-end risk while remaining cautious about early 2026. Short-term protective puts have become more expensive, though mid-term call spreads targeting $100,000 to $125,000 remain active.

Stock Market Posts Broad Gains

Wall Street started the holiday-shortened week with gains across major indexes. The S&P 500 rose 0.6% to finish NEAR its December 11 closing high of 6,901.

The Dow Jones Industrial Average added 228 points or 0.5%. The Nasdaq Composite climbed 0.5% as the tech rally continued.

The Russell 2000 outperformed larger indexes, gaining 1.16% as traders moved into riskier assets. ETFs focused on high beta stocks and momentum also posted strong gains.

Daniel O’Regan from Mizuho noted that volume remained light but risk assets showed renewed strength. Consumer staples were the only sector that failed to participate in the rally.

The market will trade normal hours on Tuesday but will close early Wednesday ahead of the Christmas Day holiday. The Santa Claus rally period begins Wednesday, covering the final five trading sessions of the year through the first two days of January.

Treasury yields moved higher with the 2-year note rising to 3.51% and the 10-year reaching 4.17%. Gold and silver prices also rallied to record levels.

Crypto Stocks Show Mixed Results

Crypto-related equities delivered mixed performance on Monday. Hut 8 led gainers with a 16% increase following last week’s announcement of a 15-year AI data center lease with Fluidstack.

Benchmark analyst Mark Palmer raised his price target on Hut 8, providing additional support for the stock. Coinbase and Robinhood also traded in positive territory, though both pulled back from session highs as crypto prices weakened.

Strategy swung from a 3% gain to a modest loss by the end of the trading day. The choppy action in bitcoin between $85,000 and $90,000 has created uncertainty for stocks tied to crypto performance.