BlackRock’s iShares bitcoin Trust Gains Approval for Options Trading
BlackRock’s iShares bitcoin Trust (IBIT) has received approval from the U.S. Securities and Exchange Commission (SEC) to list and trade options on its bitcoin spot ETF. This development is anticipated to have a significant impact on the financial markets, boosting liquidity, attracting long-term investors, and driving higher participation in the bitcoin market, as outlined by the research firm CryptoQuant.
Options for the IBIT bitcoin spot ETF will offer investors a valuable tool for hedging or speculating on bitcoin price movements. The introduction of options represents another milestone in the broader institutional adoption of bitcoin, a trend that has been steadily gaining momentum in recent years.
Options Introduce Potential Rise in bitcoin Shorting
According to CryptoQuant, the availability of options for bitcoin trading may lead to an increase in the 'paper' supply of bitcoin. Investors can now gain exposure to bitcoin through options trading without needing to transact directly in the spot market, enabling them to go long or short on bitcoin without owning the underlying asset.
The research firm's data reveals an uptick in bitcoin supply in the perpetual futures market of cryptocurrency exchanges, particularly during the bear market of 2022. This surge was driven by investors shorting bitcoin, with open interest rising from 279K to 549K bitcoin.
While bitcoin has historically been known for its volatility, options present a way for investors to mitigate risks by hedging positions or taking calculated speculative bets with limited downsides.
Increased Liquidity Mirrored in bitcoin Options Market
The surge in liquidity in the bitcoin options market mirrors the trend observed on the Chicago Mercantile Exchange (CME). Open interest in bitcoin options soared to nearly $500 million on March 12, 2024—a five-fold increase from the levels seen in 2023. This robust demand for derivatives tied to bitcoin signifies the growing interest in these financial instruments.
The approval of options trading for IBIT marks a significant progression in the bitcoin market, offering new opportunities for both institutional and retail investors alike. Analyst Ki Young Ju from CryptoQuant notes that with the approval of spot ETFs and now options, the U.S. market is reasserting its dominance in bitcoin holdings.
SEC Postpones Decision on ethereum ETF Options
While the SEC granted approval for options trading on BlackRock’s iShares bitcoin Trust, the regulatory body has chosen to defer its decision on Nasdaq's proposal to list and trade options on BlackRock’s iShares ethereum Trust (ETHA). Initially slated for a decision by September 26, the SEC has rescheduled its ruling to November 10 to further evaluate the potential impact on market stability.
The delay underscores the SEC's cautious approach to assessing the introduction of new financial instruments tied to cryptocurrencies like ethereum. Market participants will be eagerly awaiting the SEC's decision on the ETHA options, which could have far-reaching implications for ethereum's market dynamics.
