Why Is the Crypto Market Crashing? Unpacking the $28 Billion Options Pressure

The cryptocurrency market just experienced a sharp pullback during US trading hours, wiping out morning gains as a massive wave of options contracts approached expiration. If you’re wondering why the crypto market is crashing right now, the answer lies in a perfect storm of thin holiday volumes and unprecedented derivatives pressure.

The $28 Billion Bomb Exploding Today

Bitcoin and Ethereum options totaling over $28 billion are expiring on December 26th, creating enormous downward pressure across the entire market. At the time of writing, Bitcoin (BTC) had dropped below $87,000 from its intraday peak of $89,000, while Ethereum (ETH) and Dogecoin (DOGE) each shed over 3% in the past 24 hours.

Here’s the specific breakdown: Over $23 billion in Bitcoin options will expire, alongside $4 billion worth of Ethereum contracts. This isn’t random—it’s a synchronized event that historically triggers market volatility. The numbers are staggering enough to move prices alone, but when combined with holiday-depleted trading volumes, the impact becomes magnified.

Technical Red Flags Suggest Worse Pain Ahead

Bitcoin’s price chart is screaming warnings that most traders are ignoring. The three-day timeframe reveals multiple bearish patterns converging simultaneously—a textbook setup for a sharp decline.

The Warning Signs:

BTC has formed a rising wedge pattern, where two ascending trendlines are converging. At the same time, a bearish pennant is developing, consisting of a vertical price spike followed by a symmetrical triangle compression. Even more critically, Bitcoin is approaching a death cross—the moment when the 50-day Weighted Moving Average drops below the 200-day, historically a strong bearish indicator.

The combination of these patterns points to a likely collapse toward November’s low around $80,000. Break that level, and the next support doesn’t arrive until $75,000—a potential 17% drop from current levels.

Options Data Reveals Market Positioning

The technical picture gets worse when you examine where traders have positioned themselves. Bitcoin’s put-call ratio of 0.38 indicates bullish skew—meaning more traders expect upside. However, the maximum pain point sits at $96,000, suggesting most options will expire worthless as prices settle here or lower.

Ethereum tells a similar story. With 1.28 million ETH contracts expiring worth $4+ billion, the put-call ratio between 0.43 and 0.45 also shows bullish positioning. Yet the maximum pain level at $3,000 suggests traders are overconfident about ETH’s ability to hold current levels.

Why Holiday Trading Makes It Worse

The timing couldn’t be worse. The crypto market is experiencing substantially lower trading volumes due to year-end holidays, meaning every option contract expiration creates outsized price moves. When professional traders and market makers withdraw for the holidays, retail and algorithmic trading dominate—increasing price swings and reducing stability.

Compare this to normal market conditions: the same $28 billion expiry event wouldn’t trigger as severe a reaction with full participation from institutions.

What Happens Next?

The crypto market often experiences elevated volatility immediately before and after major options expirations—this event is expected to be particularly turbulent. Whether Bitcoin holds above $87,000 or breaks lower to test the previously mentioned support levels will determine market sentiment for the coming weeks.

With technical patterns aligned bearishly and derivatives pressure mounting, the next 24-48 hours will be critical for determining whether this pullback evolves into a genuine correction or another temporary shake-out.