BlackRock IBIT Options Will Bring Longterm Investors to Bitcoin: CryptoQuant

BlackRock’s iShares Bitcoin Trust (IBIT) is set to make waves in the financial markets with the U.S. Securities and Exchange Commission (SEC) approving the listing and trading of options on its Bitcoin spot ETF.

This approval is expected to increase liquidity, attract long-term investors, and boost participation in the Bitcoin market, according to the research firm CryptoQuant.

The introduction of options for the IBIT Bitcoin spot ETF will provide investors with a tool to hedge or speculate on Bitcoin price moves. It’s another step toward broader institutional adoption of Bitcoin, a trend that has been gaining momentum in recent years.

The ability to trade options means BlackRock’s IBIT ETF will allow investors to manage their risk profiles more effectively, increasing their confidence in entering the cryptocurrency market, highlights CryptoQuant.

Options Mean Rise in Bitcoin Shorting

“Options could also mean that the ‘paper’ supply of Bitcoin will increase, as investors can get exposure to Bitcoin (buying or selling) without having to invest through the spot market being long without actually buying Bitcoin or being short/selling without having to buy Bitcoin in the first place,” according to CryptoQuant.

The chart below CryptoQuant highlights the Bitcoin supply in the perpetual futures market of crypto exchanges, as measured by the open interest in terms of Bitcoin. This increased during the bear market of 2022 from 279K to 549K Bitcoin as investors shorted Bitcoin.

Historically, Bitcoin has been seen as a high-volatility asset, but options offer a way to mitigate some of that risk by allowing investors to hedge positions or take speculative bets with limited downside.

This surge in liquidity echoes the trend seen in the Bitcoin options market on the Chicago Mercantile Exchange (CME), where open interest reached a record high of nearly $500 million on March 12, 2024. This is a five-fold increase from 2023 levels, illustrating the growing demand for derivatives tied to Bitcoin.

Overall, the approval of IBIT options trading is being seen as an evolution in the Bitcoin market, opening new doors for both institutional and retail investors.

With the approval of spot ETFs and now options it seems the U.S. market is once again gaining dominance in Bitcoin holdings, according to CryptoQuant analyst Ki Young Ju.

The 🇺🇸U.S. is regaining dominance in #Bitcoin holdings. Its ratio compared to other countries is rising, driven by spot ETF demand. Only known entities are included. pic.twitter.com/a9XOb5134E

— Ki Young Ju (@ki_young_ju) September 26, 2024

SEC Postpones Decision on Ethereum ETF Options

The SEC has postponed its decision on Nasdaq’s proposed rule change to list and trade options on BlackRock’s iShares Ethereum Trust (ETHA). Originally expected by September 26, the SEC’s decision has now been pushed back to November 10.

In a press release, the agency said the delay allows it to assess the potential implications of such a move on market stability.