The new cryptocurrency-related financial instrument is finally here.
Investors can now trade options on one of the most popular bitcoin ETFs that hit US exchanges 10 months ago.
You probably already know that an option is a contractual right to purchase or sell a financial item at a set price and for a specified period.
Blockworks received feedback from industry observers that options could lead to a robust ecosystem centered around spot ETFs. They also said this would improve liquidity and price discovery.
CK Zheng of ZX Squared Capital crypto hedge fund, CIO, told me that Bitcoin ETF options were available today. “extremely powerful” Institutional investors can better manage their Bitcoin exposures in various market conditions.
Anchorage Digital CEO Nathan McCauley has said that in a recent statement, the new product is proof of how bitcoin can be used to further your goals. “cementing its place alongside stocks, bonds and commodities as a mainstream institutional investment.”
Zheng explained that speculators can use the options to increase their stakes when they have a strong bullish or negative view of an asset.
Jeff Park of Bitwise previously stated that these options will mark “the first time the financial world will see regulated leverage on a perpetual commodity that is truly supply-constrained.”
Joe Consorti, in a video for X, explains it another way: listing options on Bitcoin ETFs “opens the door to the largest and deepest liquidity pools on the planet.”
The following are some events leading up these listings.
- Nasdaq NYSE Cboe have submitted to the SEC proposals in January for listing options on spot Bitcoin ETPs.
- Grayscale Investments, in a blog post published in March, referred to the SEC’s approval of bitcoin ETFs and options quickly. The company urged the regulators to approve the spot products the same way. In a March blog post, Grayscale Investments cited the SEC’s quick approval of options on bitcoin futures ETFs and called for the regulator to do the same with spot products.
- The SEC on Sept. 20 gave “accelerated” Options on BlackRock’s iShares Bitcoin Trust were approved. Around a week later, the SEC granted approval to NYSE’s and CBOE’s bids to list other bitcoin ETFs.
- The CFTC has essentially given in to the SEC, and the Options Clearing Corporation. “does not implicate the CFTC’s jurisdiction.”
- In a Monday memorandum, the OCC claimed that it was “preparing for the clearance, settlement and risk management” There are bitcoin ETF options. Later that day, a Nasdaq representative confirmed to me that they planned to list IBIT on Tuesday.
Here we are. Options on IBIT are available today; that fund has grown to have roughly $43 billion in assets under management — making it by far the largest bitcoin ETF and even bigger than the iShares Gold Trust (IAU).
Grayscale said bitcoin ETF options are set to begin trading on NYSE — the exchange on which its GBTC and BTC products are listed — tomorrow. Bitwise also expects options on Bitwise’s bitcoin ETF to be traded tomorrow.
“Many new investors will, no doubt, leverage their experiences in investing in the meme stock options market to bitcoin options,” Zheng pronounced. “The bitcoin ETF options market will compete greatly with Deribit to bring more investors to the US and help build the US as the bitcoin derivative trading center.”
Bitwise’s Park noted on X the BTC ETF option will have “cross-margining capabilities in multi-asset portfolios” Deribit “can never provide.”
He added that: “Only spot ETF options can leverage your GLD, SPY, HYG ETFs, bonds, loans, and cross-margin to achieve unmatched capital efficiency — closest thing that looks like free leverage.”
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