According to Bloomberg ETF analyst James Seyffart, this could signal the introduction of similar options features across other Bitcoin ETFs. The news came shortly after the Office of the Comptroller of the Currency (OCC) confirmed that options trading for BlackRock’s iShares Bitcoin Trust (IBIT) would begin today, Nov. 19.

Options trading allows investors to buy or sell assets at a set price within a specific timeframe, offering flexibility for speculation and risk management. As such, the introduction of this feature is expected to increase investor options for managing Bitcoin exposure.

Industry experts believe it will enhance market liquidity, attract new participants, and integrate Bitcoin into the broader financial system.

Limitation still exists

However, not all aspects of the new options trading environment are without concerns. Bitwise’s Jeff Park, Head of Alpha Strategies, expressed reservations regarding the position limits imposed on Bitcoin ETFs.

For instance, BlackRock’s IBIT is capped at 25,000 contracts, which Park argues is too low compared to the 400,000 options the ETF could support. He wrote:

“IBIT should have qualified for 400,000 options. To put this into context, CME Bitcoin futures contracts have a 2,000-contract limit, which is equivalent to about 175,000 contracts for IBIT. Instead, we were given just 280 Bitcoin futures contracts.”

Park explained that such restrictions could disrupt market conditions, forcing natural buyers and sellers to navigate complex volatility patterns. Nevertheless, the Bitwise executive pointed out that retail traders should not focus solely on larger ETFs like IBIT but also explore other issuers, which could present attractive opportunities.

Meanwhile, Park acknowledged that the regulatory landscape has progressed significantly in 2024, with the CFTC deferring authority for ETF options to the SEC. He stated:

“If the CFTC had been as politicized as the SEC, we might not have had a fair launch at all. Their willingness to cede authority for ETF options to the SEC, recognizing them as securities within the scope of the law, is commendable.”

Strong ETF flows

The development surrounding the Bitcoin ETF options trading comes as the financial instruments continue to attract strong investor interest 11 months after their launch.

Data from crypto analysis platform SoSoValue shows net inflows of $254 million for spot Bitcoin ETFs on Nov. 18, rebounding after two days of $770 million in outflows.

BlackRock’s iShares Bitcoin Trust led the pack with $89.3 million daily inflows, followed by Fidelity’s FBTC with $60 million. Bitwise BITB, VanEck’s HODL, and ARK 21Shares ARKB recorded $44 million in inflows.

Additionally, GGrayscale’sGBTC and its mini fund posted around $60 million combined inflows.

These developments underline the growing demand for Bitcoin-based investment vehicles as the market matures and offer new opportunities for retail and institutional investors.

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