Traders Brace for Bitcoin Downside After Options Expiry

A major Bitcoin options expiry event last Friday has reset market positioning, with new data from Glassnode showing traders are increasingly bracing for potential downside.

The $15.6 billion expiry, one of the largest so far in 2026, cleared a significant amount of derivatives exposure from the market. This has reduced short-term hedging pressure and left traders rebuilding positions from a cleaner baseline.

Open interest in Bitcoin options dropped sharply after the event, falling from about 550,000 contracts to around 320,000, reflecting the expired positions rolling off, with new trades now expected to better reflect current sentiment around Bitcoin.

At the same time, expectations for price swings are rising. Implied volatility for at-the-money options climbed from roughly 48–50% into the mid-50s, signaling stronger demand for options protection.

The shift comes as Bitcoin’s recent upward momentum shows signs of slowing.

Traders are also leaning more defensive. Options skew, a measure of demand for downside versus upside protection, has climbed back to the top of its one-month range, near 16%. This suggests investors are more focused on guarding against price drops than betting on further gains.

Trading activity reflects that caution. Over the past two weeks, nearly two-thirds of options volume has been tied to put contracts, which are typically used to hedge downside risk. 

Some traders are selling these contracts to collect premium, while others are buying them to protect against further losses.

According to Glassnode, periods driven by bullish positioning have been brief. In contrast, bearish trades have been more sustained, pointing to stronger conviction on the downside.

Despite the cautious mood, risk remains concentrated within a relatively narrow range. 

A large share of market exposure sits between $64,000 and $68,000, where derivatives positioning could amplify price moves. This zone holds an estimated $1.5 billion in sensitivity to price changes, making it a key area to watch in the near term.

There are no similarly large risk clusters above this range, suggesting that volatility may remain more contained outside of it.

At the same time, demand for protection around the $65,000 level has strengthened. Traders continued to build downside hedges even as Bitcoin recovered toward $70,000 after being rejected near $75,000. The pattern indicates ongoing concern about further weakness.

The post-expiry reset is giving a clearer picture of market sentiment. Volatility expectations are rising, and traders are positioning more defensively. While risks appear contained within a defined range, the overall bias suggests investors are preparing for choppier conditions and possible downside in the near term.

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