Bitcoin Options Data Signals Bearish Advantage Ahead of FOMC Decision as $10.8B Expiry Looms

Critical Week for Bitcoin as Options Expiry Meets Fed Policy Decision

Bitcoin faces a pivotal 48-hour period that could determine price direction for the coming weeks, as a massive $10.8 billion options expiration collides with the Federal Reserve's latest policy announcement. Despite bullish traders holding more call options than puts in absolute terms, the actual positioning of these instruments reveals bears maintain structural advantages unless Bitcoin can decisively break above $90,000. Meanwhile, historical patterns suggest the Fed meeting itself could trigger sharp downside moves, adding another layer of pressure to an already precarious market setup.

This convergence of technical and macroeconomic factors arrives as Bitcoin hovers precariously near one-month lows, testing investor resolve and market structure simultaneously. The outcome could either validate the bullish thesis that has sustained Bitcoin above $87,000 for two months, or confirm bearish fears that the rally has exhausted itself.

The Facts

Friday's options expiration represents one of the largest monthly settlements, with $10.8 billion in Bitcoin options set to expire across exchanges ^[1]. The headline numbers appear bullish, with call options totaling $6.6 billion compared to just $4.2 billion in puts—a 57% advantage for instruments betting on price appreciation ^[1]. However, this surface-level reading obscures critical nuances in how these positions are actually structured.

At Deribit, which controls 78.7% of the Bitcoin options market, less than 17% of call options interest sits below the $92,500 strike price ^[1]. More tellingly, a significant portion of call options at $100,000 and above appear to be covered call strategies rather than directional bullish bets. In covered call structures, sellers collect upfront premiums similar to bond interest while retaining their underlying Bitcoin, though with capped upside potential ^[1]. These positions function more as income-generation tools than pure bullish expressions.

The pricing structure itself reveals trader psychology. A $70,000 call option for late February currently trades at 0.212 BTC, significantly more expensive than an $80,000 call at 0.109 BTC ^[1]. This counterintuitive pricing reflects demand for complex hedging strategies rather than simple directional bets. Meanwhile, calls at $110,000 or higher trade for less than 0.002 BTC (roughly $180), making them nearly worthless ^[1].

When analyzing probable outcomes for Friday's expiry, the bearish tilt becomes apparent. If Bitcoin remains between $86,000 and $88,000, put instruments gain a $775 million net advantage. Between $88,001 and $90,000, bears still hold a $325 million edge. Only above $90,001—where Bitcoin hasn't traded sustainably in recent weeks—do call options gain advantage, with a $220 million benefit between $90,001 and $92,000 ^[1].

Compounding this options setup, the Federal Reserve's policy meeting concludes Wednesday evening, with the decision announcement at 20:00 CET followed by Chair Jerome Powell's press conference ^[3]. Market expectations show just 2.8% probability of a rate cut in January, suggesting tight financial conditions will persist ^[2]. Historical patterns from 2025 reveal concerning precedent: Bitcoin declined after seven of eight FOMC meetings last year, with drawdowns ranging from -6% to -29% ^[2]. Only May produced a brief +15% rally before momentum faded ^[2].

The broader market context shows Bitcoin trading just below $90,000 while Ethereum broke through $3,000, gaining 2.4% in 24 hours ^[3]. The crypto market's 24-hour correlation with the Nasdaq-100 reached +0.76, the highest since October 2025, indicating Bitcoin remains highly sensitive to risk sentiment in traditional markets ^[3]. Meanwhile, gold surged to new all-time highs above $5,215 per ounce amid dollar weakness and demand for safe-haven assets ^[3].

Analysis & Context

The convergence of options expiry and Fed policy creates a particularly treacherous environment for Bitcoin bulls who have defended the $87,000 level repeatedly over two months. The options data reveals that despite numerical superiority in call open interest, the actual strike distribution and strategy composition favor bears at current price levels—a classic case where surface metrics mislead.

The prevalence of covered calls at $100,000 and above deserves special attention. These structures have become increasingly popular as Bitcoin volatility compressed and the rally stalled below $95,000. Traders holding spot Bitcoin have essentially monetized stagnation by selling upside optionality to generate yield. While this provides income during range-bound conditions, it also represents a form of distributed selling pressure should Bitcoin attempt to break higher, as these option sellers are essentially committed to capping their exposure.

The Federal Reserve dimension adds macro risk that Bitcoin cannot ignore. The +0.76 correlation with Nasdaq-100 represents Bitcoin behaving as a risk asset rather than an uncorrelated alternative, making Powell's tone and the Fed's forward guidance directly material to crypto prices. The historical pattern of post-FOMC selloffs shouldn't be overweighted as predictive—past performance never guarantees future results—but it does highlight that these meetings consistently trigger volatility and risk-off positioning.

More fundamentally, the 2.8% probability of rate cuts signals that markets have abandoned near-term easing hopes. This matters because Bitcoin's 2023-2024 rally coincided with peak rate expectations and subsequent pivot toward easing. With rates likely staying elevated and the Fed potentially maintaining quantitative tightening longer than expected, the liquidity backdrop remains challenging for speculative assets.

The gold breakout to new highs provides an interesting counterpoint. While both Bitcoin and gold attract safe-haven narratives, their recent price action diverges sharply. Gold benefits from central bank accumulation, geopolitical uncertainty, and traditional safe-haven flows, while Bitcoin remains caught between macro risk sensitivity and its longer-term store-of-value thesis. This divergence suggests institutional capital currently favors established safe havens over digital alternatives.

For the immediate term, Bitcoin needs to reclaim $90,000 decisively—not just briefly wick above it—to neutralize the bearish options setup and potentially trigger short-covering. However, attempting this breakout into an FOMC meeting that historically triggers risk-off behavior creates unfavorable odds. The path of least resistance, based on both options positioning and macro timing, appears to tilt toward consolidation or modest downside rather than a breakout rally.

Key Takeaways

• Despite $6.6 billion in call options versus $4.2 billion in puts, Bitcoin bears hold mathematical advantage unless price breaks decisively above $90,000, with bearish strategies favored by $325-775 million at current levels below $90,000

• Significant call option interest at $100,000+ appears to be covered call income strategies rather than bullish directional bets, representing distributed selling pressure rather than upside conviction

• Historical patterns show Bitcoin declined after seven of eight FOMC meetings in 2025, with drawdowns ranging from -6% to -29%, suggesting Wednesday's Fed decision could trigger heightened volatility and risk-off positioning

• Bitcoin's 24-hour correlation with Nasdaq-100 reached +0.76, the highest since October 2025, indicating the asset remains highly sensitive to traditional market risk sentiment and Fed policy signals

• The convergence of Friday's $10.8 billion options expiry and Wednesday's FOMC decision creates a particularly challenging 48-hour window for bulls, with multiple technical and macro headwinds aligned against a breakout scenario