Investment managers expect the United States debut of options on spot Bitcoin (BTC) exchange-traded funds (ETFs) to accelerate institutional adoption and potentially unlock “extraordinary upside” for spot BTC holders.
On Sept. 20, the US Securities and Exchange Commission (SEC) greenlighted Nasdaq’s electronic securities exchange to list options on BlackRock’s iShares Bitcoin Trust ETF (IBIT). It marked the first time the regulator approved options tied to spot BTC for US trading.
Listing spot BTC options on regulated US exchanges — where the Options Clearing Corporation (OCC) safeguards traders against counterparty risk — marks a “monumental advancement” in cryptocurrency markets and creates “extremely compelling opportunities” for investors,” Jeff Park, Bitwise Invest’s head of alpha strategies, said in a Sept. 20 X post.
“For the first time, Bitcoin will have a regulated market where the OCC protects clearing members from counterparty risks,” Park said. “This means Bitcoin’s synthetic notional exposure can grow exponentially without the [default] risks that have kept investors at bay.”
The SEC approved spot BTC ETF options on Sept. 20. Source: X
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Options are contracts granting the right to buy or sell — “call” or “put” in trader parlance — an underlying asset at a certain price. In the US, if one party fails to uphold the agreement, the OCC intervenes and settles the trade.
Spot BTC options unlock an array of capital-efficient portfolio strategies for investors and could potentially catalyze “explosively recursive” price upside for supply-constrained spot BTC, Park said.
Meanwhile, “the introduction of institutional hedging and markets through options devices fundamentally dampens volatility for the underlying asset in aggregate over time,” Tom Dunleavy, a managing partner at crypto investment firm MV Global, told Cointelegraph.
To commence trading, Nasdaq still needs signoff from two other oversight bodies — the Commodities Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC). Analysts expect those approvals imminently, followed by a proliferation of similar products on other exchanges.
“I’m assuming others will be approved in short order,” Eric Balchunas, an ETF analyst at Bloomberg Intelligence, said in a Sept. 20 X post.
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