Options contracts on BlackRock’s spot Bitcoin exchange-traded fund (ETF), the iShares Bitcoin Trust ETF (IBIT), saw nearly $2 billion in total trading value, which may have pushed Bitcoin to a new high above $94k.
“IBIT options first-day trading aggregated nearly $1.9 billion in notional value across 354K contracts,” Bloomberg ETF analyst James Seyffart reported on November 20.
“These options were definitely a big part of Bitcoin’s rise to a record high today,” he added. Bitcoin (BTC) hit a new high of $94,105 on Coinbase on November 19, according to TradingView.
“$1.9 billion is unprecedented on day one,” said Bloomberg senior ETF analyst Eric Balchunas, comparing it to the first Bitcoin index ETF launched in the United States — the ProShares Bitcoin Strategy ETF (BITO) — which raised $363 million.
The new options contract gives investors the right to trade shares of ETFs at predetermined prices, allowing them to bet on price movements. The notional value measures the market exposure from the options position, taking into account price movements related to Bitcoin and the total value of the cryptocurrency covered by the options contract.
The put/call ratio for IBIT's first trading day was 0.225, meaning investors who bought calls betting that Bitcoin would increase in price far outnumbered those who bet on puts, contracts betting it wouldn't increase.
IBIT Put and Call Options. Source: James Seyffart
Balchunas added that this “seems very bullish,” especially given that contracts set to expire in a month “are essentially betting that the price of BTC will double in the next month.”
Former CNBC Africa host Ran Neuner agrees that today's market surge was caused by the launch of IBIT options.
“As traders buy these options, market makers buy spot ETFs to hedge the trade,” he said. “The result is a large net buy of ETFs, which leads to a large net buy of spot BTC.”
On November 19, industry executive Joe Consorti said that these contracts are a big deal as listing options on spot Bitcoin ETFs “opens the door to the largest and deepest liquidity pools on the planet.”
See also: Former Pimco, Millennium execs launch crypto advisory firm
“The market is optimistic that Bitcoin will end the year above $100K,” he commented on November 20 after the options launched.
Meanwhile, crypto asset manager Grayscale is also preparing to launch options for its spot Bitcoin ETF on Wednesday, November 20 in the United States.
Source: Grayscale
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