PANews reported on September 21 that Jeff Park, head of strategy at Bitwise Alpha, posted on the X platform that "SEC approval of BlackRock's Bitcoin spot ETF options trading" will lead to an explosive rise in Bitcoin. Jeff Park believes that the market is about to witness the most incredible rise in "volatility" in financial history, which should be more fully explained. The contributing factors include several characteristics of Bitcoin, the nature of the regulated options market, and the powerful combination of the two. He believes that "SEC approval of BlackRock's Bitcoin spot ETF options trading" marks the biggest progress that the cryptocurrency market may have made. For the first time, the notional value of Bitcoin will be "partially banked" through ETF options. While the limited non-custodial supply of Bitcoin is its greatest advantage, it is also a drag that limits the ability to create synthetic leverage. Now, Bitcoin will have a regulated market for the first time, and the U.S. Commodity Futures Trading Commission will protect clearing members from peer risk, which means that Bitcoin's synthetic notional exposure can grow exponentially.
Additionally, Bitcoin has a unique volatility profile, where when the spot price goes up, so does volatility, which means delta increases faster. This is explosively recursive for Bitcoin when traders who short gamma hedge (a gamma squeeze. Short traders are forced to keep buying at higher prices, and more buying leads to more upside). A negative vanna gamma squeeze would send the price of Bitcoin skyrocketing. In summary, the Bitcoin ETF options market is the first time the financial world has seen regulated leverage on a truly supply-constrained perpetual commodity. Things can get crazy, so crazy that regulated markets may be forced to shut down. But what is extraordinary about Bitcoin is that there will always be a parallel, decentralized market that cannot be shut down, unlike stocks.
