A. John was simply expressing his humility, saying he was not even worthy to untie the sandals of the One who was coming.
B. John was alluding to the Tabernacle’s covering, made of animal skin, the same material used to make sandals, thus emphasizing his unworthiness to approach the One who was coming (Numbers 4:6; Ezekiel 16:10).
C. John was using an expression with a specific meaning in Jewish teacher-disciple relationships: a disciple was expected to perform virtually every service for his teacher that a servant performed for his master, with one notable exception: removing his shoes.
While A is certainly true and B may suggest an interesting biblical connection, the best answer is C.
The Babylonian Talmud preserves this Jewish teaching: “All manner of service that a slave must render to his master, a student must render to his teacher, except that of taking off his shoes.”
John’s statement, therefore, expresses extraordinary humility. He is not merely saying, “I am the disciple and He is the Teacher.” He is saying something even stronger: “I am not worthy even to perform that one service a disciple was not expected to perform for his teacher.” John places himself below even the ordinary position of a disciple, given the Messiah’s greatness.