Bitcoin Drops Below $78K After Options Expiry, ETF Outflows

Bitcoin slipped below $78,000 over the weekend after a large options expiry and sizable ETF withdrawals. More than $4 billion in options tied to a major ETF rolled off Friday, removing dealer hedging flows that had been limiting price moves. The spot price fell roughly $4,100, reducing crypto market capitalization by about $80 billion and triggering roughly $980 million in liquidations across derivatives markets.

Market data show that dealer at-the-money gamma from the options position had kept Bitcoin trading in a narrow $78,000–$80,000 range. When those contracts expired, the mechanical buying and selling that dampened volatility disappeared and price volatility increased as leveraged long positions unwound into thinner liquidity.

ETF flows and leveraged positions contributed to sell pressure. More than $1 billion left Bitcoin ETFs in the week before the decline, the largest weekly outflow since January. Those outflows reduced a previously steady source of cash into the spot market while forced liquidations added supply into thin markets.

Macro factors also weighed on risk assets. U.S. Treasury yields rose, with the 10-year approaching 4.62% and the 30-year near 5.14%. The dollar strengthened, with USD/JPY trading around 158–159. Japanese government bond yields reached multidecade highs, and markets reassessed Fed policy after higher oil prices and hotter inflation readings. Futures and options pricing showed a 50%–60% probability that the Fed’s benchmark rate could be 25 basis points higher by January 2027 compared with earlier expectations for cuts.

Options market positioning was split between downside protection and upside bets. Put open interest concentrated at the $60,000 and $75,000 strikes totaled more than $2.4 billion. Call open interest at the $80,000 and $90,000 strikes exceeded $2.8 billion, indicating sizable exposure on both sides of the market.

On-chain metrics point to reduced immediate sell-side supply. About 60% of Bitcoin’s supply has not moved in over a year, well above levels a decade ago. Exchange balances have declined to roughly 15% of circulating supply from a COVID-era peak near 17.6%, with an estimated 500,000 BTC withdrawn from exchanges. Long-term holder supply is around 14.8 million BTC, about 74.3% of circulating coins. Short-term holder MVRV recently climbed back above 1.0.

Market and derivatives positioning concentrated activity around the $78,000–$80,000 range. Traders’ hedges and call exposure suggest ongoing volatility as market participants adjust exposure around that band.