Options trading for a spot Bitcoin ETF hit the market Tuesday and in the process pushed the price of bitcoin to yet another new all-time high.
BlackRock's iShares Bitcoin Trust (ticker IBIT) is the first spot Bitcoin exchange-traded fund to be approved for options, leading to just shy of $1.9 billion in notional exposure traded, according to Bloomberg Intelligence ETF analyst James Seyffart.
"Final tally of $IBIT's 1st day of options is just shy of $1.9 billion in notional exposure traded via 354k contracts. 289k were Calls and 65k were Puts," Seyffart said in a post on X. "That's a ratio of 4.4:1. These options were almost certainly part of the move to the new bitcoin all-time highs today."
For context: A call option gives the buyer the right — but not the obligation — to buy an asset at a specified price within a specific period. If the buyer exercises the call, a call seller must sell the asset. A put option gives the holder the right to sell the asset at a specified price on or before the expiration.
"$1.9b is unheard of for Day One. For context, BITO did $363 million and that's been around for four years," Bloomberg senior ETF analyst Eric Balchunas said on X. "And also this is with 25,000 contract position limits. That said, $1.9 billion isn't quite big dog level yet though, eg GLD did $5 billion today, but give it a few more days/weeks."
The price of bitcoin touched the $93,900 level for the first time ever earlier Tuesday afternoon. Market structure expert Dennis Dick expects the volatility of bitcoin to be reduced as more interest comes into trading the options on the spot Bitcoin ETFs.
"As open interest rises, it creates natural buyers and sellers on both sides of the market… This thickens up the market and increases liquidity, which therefore reduces volatility," Dick previously told The Block.
The world's largest cryptocurrency was trading at around $92,442 at publication time, up 1.3% over the past 24 hours according to The Block's BTC price data.
Options on Bitcoin ETFs from Bitwise and Grayscale will begin Wednesday, with others expected to follow suit.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
