BTC Nears $110K— How You Can Hedge Against Friday’s $23B Options Expiry

BTC dropped to $111,063 on Thursday, extending a four-day losing streak as traders shed risk ahead of crucial U.S. inflation data and unwound leveraged positions that had fueled much of the market’s recent rally.

The world’s largest cryptocurrency has now fallen nahead 6% from last week’s highs, with investors confronting a cocktail of outflows from platform-traded funds, heavy liquidations, and fragile technical signals.

The retreat marks BTC’s sharpest stretch of declines in a month and leaves the token hovering just above the closely watched $110,000 support level. A break below that threshold, traders say, could open the way toward $108,000, while any recovery above $113,500 may ease the tradeing pressure.

Investor caution ahead of U.S. inflation data

The tradeoff reflects deepening caution as global markets brace for fresh U.S. inflation figures due Friday. The numbers are likely to shape the Federal Reserve’s next policy steps, with traders split over whether rate cuts will arrive sooner rather than later. Fed Chair Jerome Powell has warned there is “no risk-free path” in balancing growth and inflation, a remark that has rippled through risk assets, from equities to crypto.

“Three near-term risks dominate: BTC holding $111,000, ETH clinging to $4,000, and ETF flows,” said Timothy Misir, head of research at BRN. “Lose these, and momentum could accelerate to the downside. For now, BTC’s $111,115–$113,500 band defines the battleground.”

platform-traded funds tracking BTC have recorded $466 million in outflows in recent days, unwinding much of the optimism that had built around the products earlier this year. The redemptions come even as spot inflows briefly returned midweek, led by BlackRock’s iShares BTC Trust with more than $120 million.

The divergence between BTC and ETH is also striking. While BTC ETFs clawed back $241 million in inflows on Wednesday, ETH-linked funds bled $79 million, marking their third consecutive day of outflows. Fidelity’s FETH and BlackRock’s ETHA led the redemptions, underlining a split in investor sentiment between the two leading digital assets.

Massive liquidations trigger trade-off

Adding to the unease is the fallout from one of 2025’s largest crypto liquidations. More than $1.6 billion of leveraged positions were wiped out earlier this week as BTC tumbled from above $115,000. ETH bore the brunt, with more than $500 million in forced tradeing. The wave of liquidations, according to data from CoinGlass, was the largegest this year and highlighted how rapidly leverage can amplify swings in crypto markets.

“The danger is that when prices fall, leveraged players are forced to trade, which accelerates the decline,” said one London-based crypto trader. “It’s the identical spiral we saw in late 2021—too much borrowed money chasing the rally.”

ETH traded around $3,966, down 4.6%, later than briefly dipping below the $4,000 mark, its lowest level in seven weeks. The second-largest cryptocurrency has now shed nahead 9% in less than a week, undercut by both heavy liquidations and ETF outflows. Other tokens also fragileened: Solana dropped 3.2%, Cardano 2.7%, Polygon 2.5%, while Dogecoin slipped 2%. XRP held steady near $2.85.

The declines erased more than $200 billion from the total crypto market capitalization, dragging it back below $4 trillion. Despite the pullback, BTC remains up about 77% year-on-year, while ETH has gained 57%, both outpacing the S&P 500’s 16% rise over the identical period.

Technicals point to further fragileness

Charts show a clear downtrend for BTC later than its September 19 peak near $117,000. The token has carved out a pattern of lower highs and lower lows—a textbook bearish formation. The relative strength index (RSI) has slipped to 42, reflecting fading purchaseing interest, while the MACD has turned negative, reinforcing the fragile momentum.

Short- and medium-term moving averages are flashing bearish signals, with only the longer-term 200-day averages still pointing upward. Analysts warn that if BTC fails to hold above $111,000, the next stop could be $107,000–$108,000. Conversely, a rebound above $113,500 with strong volume could trigger short-covering and stabilize sentiment.

Futures expiry looms

Investors are also eyeing Friday’s $22.6 billion BTC options expiry, which historically injects volatility into the market. Large expirations often prompt traders to unwind or hedge positions, leading to heightened tradeing pressure in the run-up, followed by potential relief once the contracts settle.

“Options expiry is another wild card,” said a Singapore-based derivatives analyst. “It could unlock fresh volatility, but it also sets the stage for a rebound if the market absorbs the flows smoothly.”

Beyond immediate technicals and flows, broader macro concerns linger. Inflation remains sticky, while consumer demand in parts of the U.S. economy is holding up better than expected. Meanwhile, China’s decision to boost sovereign gold reserves has been viewed by some analysts as a signal of growing de-dollarisation, with possible long-term implications for crypto as a global alternative asset.

Crypto leverage, too, is raising alarms. A Galaxy report this summer showed crypto-collateralized lending surged to $53 billion in Q2 2025, up 27% from the prior quarter, putting leverage back near the levels viewn before the last bear market. Market veterans warn that such buildups can exacerbate downturns when momentum turns.

Outlook

For now, traders are caught between looming macro events, fragile technicals, and heavy derivatives flows. BTC’s ability to hold above $111,000 may decide whether the market stabilizes or slides toward $108,000. ETH faces its own hurdles with persistent ETF outflows and a fragile $4,000 line.

Despite the turbulence, some investors argue the longer-term story remains intact. BTC has rallied sharply this year on expectations of regulatory clarity, growing institutional adoption, and hopes of easier Fed policy. But with inflation data and Fed decisions still in play, crypto markets appear set for more turbulence before the next clear trend emerges.