Bullish bitcoin bets paired with crash protection ahead of $8.9B options expiry.

Bitcoin and ether options worth billions of dollars are set to expire on Friday, as traders maintain a bullish bias while increasingly hedging against near-term downside risks.

Bitcoin options with a notional value of around $8.5 billion will expire on Deribit at 08:00 UTC. Deribit is the largest crypto derivatives exchange globally by trading volume and open interest. The notional values reflect the dollar value of outstanding contracts, with each option representing one bitcoin or one ether.

The crypto options market has expanded significantly since the 2020 COVID-era market turmoil, driven by growing institutional participation and the broader use of derivatives for hedging and yield strategies. Call options generally signal bullish positioning, while put options are used to protect against or benefit from price declines.

Positioning ahead of the expiry remains tilted toward calls, as shown by the put-call ratio.

“The put-call ratio for this expiry stands at 0.56, suggesting that overall positioning into month-end remains skewed toward bullish calls,” Sidrah Fariq, global head of retail sales and business development at Deribit, told CoinDesk.

The bullish skew indicates traders had been expecting stronger price action in January. Bitcoin, however, has risen only about 2% so far this month, according to CoinDesk data.

Momentum could improve if Wednesday’s Federal Reserve rate decision points to easier financial conditions. Like technology stocks, bitcoin has historically benefited from lower interest rates and increased liquidity.

At the same time, traders are actively building downside protection ahead of the Fed meeting.

“Recent flows show significant use of put diagonal calendar spreads, along with concentrated downside positioning in Jan. 30 expiries, with notable interest in the $88,000 and $85,000 bitcoin puts over the past 24 hours,” Fariq said.

“With markets largely expecting the Federal Reserve to keep rates unchanged, traders appear focused on hedging event-driven volatility rather than positioning for a policy-driven selloff,” she added.

Ether options worth approximately $1.3 billion are also set to expire on Friday alongside bitcoin contracts.

While major monthly and quarterly expiries can lead to short-term volatility, they are unlikely to have a lasting market impact. Bitcoin’s upcoming $8.5 billion options expiry, for example, represents less than 1% of its roughly $1.7 trillion market capitalization.