In short
- The “triple witchcraft” of equity derivatives can indirectly impact crypto by shifting risk appetite in the stock market, which then flows into high-beta assets like Bitcoin.
- A bigger, immediate crypto event is the December 26 expiration of more than $13.3 billion worth of Bitcoin options, with the “max pain” price between $100,000 and $102,000.
- Macro pressures, including possible tightening by the Bank of Japan and institutional portfolio rebalancing at year-end, are exacerbating headwinds and limiting upside gains, Decrypt was told.
Bitcoin Traders are gauging the potential ripple effects of the quarterly ‘Witching Friday’ on the US stock market, a major derivatives expiration that could impact risk appetite across asset classes during a week full of macro catalysts.
Bitcoin has been trading flat over the past 24 hours, remaining below $90,000 for the third day in a row, according to CoinGecko data.
“Global markets are indeed facing multiple overlapping variables this week,” said Tim Sun, senior researcher at HashKey Group. Declutter.
He pointed to U.S. nonfarm payrolls data and the Bank of Japan’s monetary policy meeting as key events impacting liquidity and risk assessments, in addition to concentrated expirations in equity derivatives.
The triple witch event, where stock index futures, stock index options, stock options and individual stock futures expire simultaneously, usually creates volatility.
“It can have an effect, but mostly indirectly,” Derek Lim, head of research at crypto market maker Caladan, told me. Declutter. “The most likely transmission is through stock movements that impact risk appetite, hitting crypto as a high-beta asset.”
Sun explained the transmission mechanism of risk appetite, citing Bitcoin’s increased correlation with the Nasdaq, with the recent rise in institutional participation.
“When large-scale derivative expirations trigger position adjustments, institutions typically engage in cross-asset liquidity management. This means that sharp volatility in US equities can easily lead to passive rebalancing in crypto markets,” he said.
However, historical patterns show mixed results.
A March witchcraft event caused a “sharp drop” in the cryptocurrency after expiration, while one occurred in June Bitcoin And Ethereum fell nearly 2%, followed by a month-long consolidation, Lim noted. At the same time, the September event had a more limited impact.
A put-call ratio near 1.10 and other metrics indicate a defensive stance among traders, with inconsistent exchange-traded fund flows and declining holiday liquidity adding to the headwinds.
These headwinds are exacerbated by conflicting macro signals, Sun noted.
While a recent rise in US unemployment has boosted expectations for rate cuts in 2026, this positive effect is being offset by other forces. “Growing attention to the Bank of Japan’s potential tightening path could lead to an unwinding of carry trades, which could lead to capital outflows from high-beta assets such as Bitcoin,” he said.
Concerns about the sustainability of AI-related capital expenditures in US equities further limit upside potential in a tight liquidity environment.
Bitcoin’s $13.3 billion options expire
Since the impact of the triple expiration was indirect, Lim deferred to a crypto-specific event looming next week.
“In my opinion, the Deribit expiry date on December 26 is the bigger event to watch, and not the witchcraft on December 19,” he said. That event involves more than $13.3 billion worth of Bitcoin options expiring, with more than half of the current open interest clustered around it. The ‘max pain’ strike is between $100,000 and $102,000, a price point at which most options would expire worthless.
Adding to the pressure at the end of the year, Sun highlighted that institutional investors are now in a phase of portfolio rebalancing. “During this process, some capital may choose to reduce risk exposure and lock in annual gains, which could create temporary selling pressure or increase the volatility of risky assets, including Bitcoin,” he said.
The end result, according to the analysts, is a day of choppy trading with the highest volatility during the late US session and a moderate likelihood of a notable crypto impact, mainly driven by the stock markets. The bigger test for Bitcoin’s price comes with the options expiration on December 26.
On prediction market Myriad, owned by DeclutterParent company Dastan, users remain optimistic about Bitcoin’s prospects, giving a 68% chance of Bitcoin’s next move taking the price to $100,000 instead of $69,000 – up from yesterday’s low of 60%.
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