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BlackRocks iShrs Bitcoin Trust ETF (IBIT) options dbutd with n stounding first-dy prformnc, rcording stggring $1.9 billion in notionl xposur trdd on Novmbr 20. Anlysts dscribd th trding volum s “unhrd of,” with 354,000 contrcts xchnging hnds. James Seyffart, n ETF nlyst t Bloomberg, ddd in n X post tht Th Finl tlly of […]
BlackRock, the worlds largest asset manager, has officially launched options trading for its Bitcoin ETF, the iShares Bitcoin Trust (IBIT). This debut comes after the ETF received regulatory approval in January and has since attracted significant inflows. Increased Liquidity And Reduced Volatility On The Horizon According to Bloomberg, the introduction of options trading on the $43 billion iShares Bitcoin Trust is anticipated to reduce volatility while broadening Bitcoin’s investor base. Related Reading: VanEck Gives Official Backing To Donald Trumps Bitcoin Reserve Strategy Alex Thorn, head of firmwide research at Galaxy Digital, stated during a Bloomberg Television interview that as Bitcoin becomes more widely held, its volatility is likely to decrease. Options will help dampen volatility, and as volatility comes down, people can take larger position sizes, he explained. Thorn noted that a decrease in volatility could shift investor sentiment, encouraging them to view Bitcoin as a viable asset for fundamental use cases rather than merely a speculative gamble. The availability of options will also enable institutions to hedge their positions more effectively, increasing liquidity and potentially impacting retail trading during bullish market conditions. Call Options Dominate BlackRocks Bitcoin ETF On Day 1 Bloomberg ETF analysts Eric Balchunas and James Seyffart reported that on the first day of options trading, the total notional exposure for IBIT reached nearly $1.9 billion, spread across 354,000 contracts. Of these contracts, 289,000 were calls, while 65,000 were puts, resulting in a bullish call to put ratio of 4.4:1. Seyffart claimed that this overwhelming interest in call options contributed to Bitcoin hitting new all-time highs of $94,000 during Tuesday’s trading session for the market’s leading crypto. Balchunas, on the other hand, pointed out that the majority of options contracts are bullish, especially the December 20 call option, which essentially bets that the Bitcoin price will double within a month. This means that based on current prices, investors are expecting BTC to hit a new record high of little over $180,000 by that date. The put/call volume ratio for BlackRock’s Bitcoin ETF was “impressive,” according to Balchunas, who noted that the ratio of 0.17 indicates strong bullish sentiment compared to other ETFs, such as the SPDR S&P 500 ETF (SPY) with a ratio of 1.1. Related Reading: Bitcoin Reaches New High Of $94,000: Blockstream CEO Anticipates $1 Million Ahead Market expert Marty Party highlighted in a social media post that options on the iShares Bitcoin Trust will settle in actual Bitcoin. This means that when an option contract is exercised, settlement will involve the delivery of Bitcoin, giving investors direct exposure to BTC price movements without the need to interact with crypto exchanges. At the time of writing, the market’s leading digital asset is trading at $91,580, up 4% in the weekly time frame after today’s bullish move to its new high. Featured image from DALL-E, chart from TradingView.com
The Bitcoin price volatility is likely to surge in both directions following the recent approval of options for spot Bitcoin ETFs, according to Jeff Park, head of Alpha Strategies at Bitwise Investments. In an interview with Anthony Pompliano, Park explained how these newly available options differ from existing crypto derivatives and why they could significantly impact the Bitcoin market dynamics. Why Bitcoin ETF Options Are A Game Changer Park outlined a comprehensive thesis in the interview, noting, “Volatility is not just a static measure of past performance; it reflects the distribution of potential outcomes and the severity of those outcomes.” He emphasized that the introduction of Bitcoin ETF options will bring new dimensions to how traders interact with Bitcoin, potentially amplifying both price rises and falls. This volatility, he argued, stems from the unique characteristics of options as financial instruments. Related Reading: Bitcoins Puell Multiple Signals A Bullish Surge: Could A New ATH Be Near? While Bitcoin options are not entirely newoffshore platforms like Deribit and LedgerX already offer similar instrumentsETF options introduce a regulated market overseen by US authorities like the CFTC and SEC. This makes a profound difference, according to Park, because “removal of counterparty risk is something that crypto has not fully solved offshore.” He noted that the clearing mechanisms provided by the Options Clearing Corporation (OCC) bring added security to these trades, which institutional investors have long demanded. More importantly, Park highlighted the advantage of cross-collateralization, which is not available on existing platforms that cater exclusively to crypto. “Cross-collateralization allows traders to use non-correlated assets, such as gold ETFs, as collateral in Bitcoin trades,” he explained. This flexibility increases liquidity and efficiency in the market. “You can’t do this on Deribit or any purely crypto-focused platform,” Park emphasized, calling it a “huge unlock” for the Bitcoin derivatives market. Park anticipates that the introduction of these options will magnify Bitcoins price swings. “For any well-functioning and liquid market, you need organic buyers and sellers to create natural demand and supply,” he explained. However, the real impact comes from how dealers hedge their positions, especially when they are “short gamma,” a condition where their hedging activities can intensify price movements. In practical terms, Park said, “Dealers who are short gamma must buy more Bitcoin as prices rise and sell more as prices fall, thereby adding to the volatility.” This dynamic is crucial to understanding how ETF options could push Bitcoin’s price to extremes in both directions. He also pointed out that, historically, most Bitcoin options activity has been driven by speculation, rather than risk management strategies like covered calls, which tend to reduce volatility. Related Reading: Heres Where We Are In The Bitcoin Bull Cycle According To The Wall Street Cheat Sheet One of Parks key points was the dramatic growth potential for Bitcoins derivatives market. In traditional markets like equities, the derivatives market is often 10 times larger than the underlying spot market. In contrast, Bitcoins open interest in derivatives currently represents just 3% of its spot market value, according to Parks figures. “The introduction of ETF options could lead to a 300x increase in Bitcoin’s derivatives market size,” Park predicted. This growth would bring substantial new liquidity but would likely also drive volatility higher, due to the larger volume of speculative trades and the structural leverage introduced by options. That’s an astronomical number for which there’s going to be new flows and liquidity coming into this market which will likely therefore add volatility, Park stated. “In the global economy, derivatives markets are far larger than the spot markets,” he added, pointing to the fact that in traditional asset classes like equities and commodities, derivatives play a critical role in risk management and speculation. “Bitcoin is moving toward a similar structure, and thats where well see the most significant price movements and liquidity, Park concluded. At press time, BTC traded at $62,334. Featured image from YouTube, chart from TradingView.com
To confirm a potential breakout from its current crab walk, Bitcoin needs to close the week above $68,700, according to market analysts.
US spot Bitcoin xchng-trdd funds (ETFs) r xprincing thir strongst dy in ovr four months. On Octobr 14th, ths invstmnt vhicls witnssd collctiv nt inflow of stggring $555.9 million, mrking th lrgst dily nt inflow sinc rly Jun, ccording to dt from SpotOnChin. This significnt influx coincids with Bitcoin rching two-wk high […]
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