The approval of options on Blackrock's Bitcoin ETF will bring more institutional adoption of the asset, which will lower volatility & limit explosive upside of bitcoin.
Bitcoin will be a great asset going forward.
Just don't expect the same returns as in past years.
— Anthony Pompliano 🌪 (@APompliano) September 20, 2024
The U.S. Securities and Exchange Commission (SEC) has approved a rule change that allows Nasdaq’s International Securities Exchange to list and trade options on the iShares Bitcoin Trust (IBIT), BlackRock’s widely-traded exchange-traded fund. This decision marks a significant step in expanding the range of derivative products linked to Bitcoin. It provides investors with additional tools for managing exposure to the world’s largest cryptocurrency.
BlackRock had been seeking approval for such a listing since at least March of this year.
So once options trading on spot bitcoin ETFs commences…
Expect *flurry* of various ETF filings.
Bitcoin buffer or defined outcome ETFs.
Bitcoin premium income or yield max (covered call) ETFs.
Bitcoin tail risk ETFs.
Bitcoin convexity ETFs.
All of it.
— Nate Geraci (@NateGeraci) September 22, 2024
This followed the regulator’s approval of multiple Bitcoin-linked ETFs in the U.S. The SEC’s approval comes after several amendments submitted by Nasdaq ISE. These aimed to address concerns over market manipulation and excessive risk-taking in the emerging crypto options market.
A key amendment sets position and exercise limits for options on IBIT at 25,000 contracts. The exchange described this as “extremely conservative” given the size of the market and the trust’s liquidity. Options on IBIT will be physically settled and feature American-style exercise.
Remember, spot btc ETFs have taken in a net $18bil in 8 months…
With no options trading, no in-kind creation & redemption, & limited approval on major wirehouse platforms (plus no access on Vanguard).
Monumental success w/ one hand tied behind back.
— Nate Geraci (@NateGeraci) September 20, 2024
Sec approves Bitcoin ETF options
This offers a hedge for investors looking to manage Bitcoin-related risks. BlackRock’s ETF, which tracks the price of Bitcoin, has attracted significant attention from both retail and institutional investors since its launch earlier this year.
It has become one of the most liquid Bitcoin-related products in the U.S. market. Despite the approval, the SEC’s move comes amid ongoing concerns about the potential risks associated with cryptocurrency derivatives. Comment letters submitted during the review process highlighted worries over market volatility and the broader integration of crypto into traditional financial markets.
Some urged the SEC to delay approval until the Bitcoin market further stabilized. Nonetheless, the SEC found that the exchange’s surveillance mechanisms would be sufficient to deter manipulation. These include real-time monitoring and inter-market surveillance-sharing agreements with the CME.
This latest development underscores the growing acceptance and integration of Bitcoin and other cryptocurrencies into traditional financial systems. It offers more sophisticated financial instruments to investors looking to navigate the volatile digital asset market.
