Bitcoin investors are bracing for “Witching Friday” tomorrow, December 18, when billions of options are due to expire—making for what could be a highly volatile, roller-coaster ride at the end of the week for the markets.
Some $23 billion in contracts are set to expire just on Deribit, the largest Bitcoin exchange, according to Bloomberg.
Here’s what to know.
What is ‘Witching Friday’?
“Witching Friday,” also known as “triple witching” or “the triple witching hour,” refers to the last hour of the stock market trading session on the third Friday of March, June, September, and December, when three kinds of securities expire simultaneously, often leading to increased volatility.
Those securities are: stock index futures, stock index options, and stock options, (plus single-stock futures), according to Decrypt.
These “triple witching” days often generate more trading activity, thus more volatility, or larger swings, since the expiration of the contracts trigger buying or selling of the underlying security, per Investopedia.
“These witching days simply indicate higher volume and the ability to inflict maximum pain if certain thresholds are hit,” Michael Terpin, author of Bitcoin Supercycle and CEO of Transform Ventures, told Fast Company. “It’s by no means a guarantee of falling prices, but with the steady drumbeat of fear in the market, including the Japan rate hike decision, the odds of a lower low grow higher.”
Where does Bitcoin stand now?
In the lead-up to Friday’s event, Bitcoin continues to fall, as it has in recent weeks, triggered in part by the Federal Reserve’s recent interest rate cut by 25 basis points on December 10, and compounded by uncertainty over the long-term, macroeconomic environment ahead, the Bank of Japan’s potential rate hike, and fear of growing U.S. inflation in 2026.
On Thursday afternoon, at the time of this writing, the digital cryptocurrency (BTC) was trading down nearly 1%, dipping well below $90,000, to $85,184.
It’s part of an overall decline in the crypto market that also saw closely watched digital asset XRP fall nearly 2%, hovering around $1.82 per token on Thursday, while Ethereum (ETH) held steady and was trading at $2,802 at the time of this writing.