Here's What the Bitcoin Options Market Says About Halving

• Bitcoin options show expectations for pre-halving price weakness and a bullish bias following the pivotal quadrennial event.
• The long-term outlook depends more on macro factors than halving, analysts said.
• Options market shows expectations for a price rally into six figures by December.

The bitcoin (BTC) options market, historically a reliable indicator of sentiment, is showing investors expect weakness in the run-up to the mining-reward halving due April 20 followed by a rally after the event, which reduces the pace of new bitcoin creation by cutting the per-block coin emission to 3.125 BTC from 6.25 BTC.

The world's largest cryptocurrency by market cap is currently trading about $71,000. Put options at strike prices of $61,000 and $60,000 listed on derivatives exchange Deribit have the highest build-up, respectively, of open interest among options expiring a week before and a day before halving, according to data tracked by Amberdata.

Put options are derivative contracts that give the purchaser the right, but not the obligation, to sell the underlying asset at the specified price at a later date. A put buyer is implicitly bearish on the market, looking to profit from or hedge against a price slide. Open interest refers to the number of active or open contracts at a given time.

The chart shows open interest distribution in options expiring on April 19, a day before halving is expected. At press time, open interest in the $60,000 put was 1,000 contracts or $70.90 million, the highest in the expiry. On Deribit, one options contract represents one BTC.

The temporary pre-halving nervousness is consistent with analysts' view that prices may wobble around the halving time.

Meanwhile, open interest in options expiring on April 26 – about a week after the halving – was more evenly distributed, with calls or bullish bets at $70,000 and $80,000 more popular than others. A call buyer is implicitly bullish on the market.

"Right ahead of the halving, you have notable open interest in the $60,000 put expiring a day before the event, whereas month-end is a bit more spread out," Simranjeet Singh, a trader at the crypto trading firm and liquidity provider GSR, told CoinDesk. "I guess some traders may want to fade the move in the short term, similar to the ETF event, until we reach a nice consolidation level for another leg higher."

Singh said the next leg higher partly depends on the U.S. interest-rate outlook and political developments.

Bitcoin saw a brief drop to $67,600 on Wednesday after hotter-than-expected U.S. inflation data saw traders push back the timing of the first Fed rate cut to November from June. The losses were short-lived, with prices rebounding early Thursday as the rate cut remains on the table, though delayed.

"The newly found 'Fed put' remains in place though, with the Fed focused on both risks to inflation and employment, rather than on inflation alone," trader and analyst Alex Kruger said on X. The "Fed put" is a notion that the central bank will come to the rescue if the economy or markets falter.

Trader Christopher Newhouse said bitcoin options expiring after May will be affected more by the macroeconomic environment and organic demand than the halving.

The large concentration of open interest in the $100,000 December expiry and the $200,000 March 2025 expiry calls shows expectations that macro factors would continue to act as a tailwind.

As of writing, the December expiry call at $100,000 had a notional open interest of $226 million, while the open interest in the March expiry call at $200,000 was $70.7 million.