BlackRock’s iShares Bitcoin Trust (IBIT) has set a new precedent in the cryptocurrency market with the launch of the first-ever U.S. spot Bitcoin ETF options. This milestone product went live on Tuesday, gaining a significant head start over other Bitcoin-linked ETFs that began trading the following day.
With a market cap of $44 billion, IBIT saw a strong debut, with over $2 billion in options trading volume on its first day. The ETF itself traded more than $4 billion in volume, ranking just behind major traditional ETFs like SPDR S&P 500 (SPY), Invesco QQQ (QQQ), and iShares Russell 2000 (IWM), all of which have significantly larger market caps, according to data from Coinglass.
Eric Balchunas, a senior ETF analyst at Bloomberg, highlighted the success of the IBIT options debut but cautioned that it hasn’t yet reached the scale of leading ETFs in the market. Despite this, the $1.9 billion in first-day trading volume was a significant achievement, especially when compared to BITO, which recorded just $363 million on its first day four years ago. Balchunas also noted that the 25,000-contract position limit currently in place for Bitcoin ETFs restricts the options market’s potential growth.
This position cap is one of the key regulatory hurdles faced by Bitcoin ETF options, limiting the amount of contracts a participant can hold at any given time. This limit was put in place by regulators to prevent market manipulation, but it has drawn criticism from industry players who feel that it hampers the market’s natural growth.
Jeff Park, Head of Alpha Strategies at Bitwise, addressed the issue on social media, pointing out that the exercisable risk for IBIT options is much smaller than that of traditional ETFs. While the industry standard is about 7% of the ETF’s shares being available for options contracts, IBIT options represent just 0.5% of its total shares. Park also suggested that the CME Group, which focuses primarily on Bitcoin futures, may be pushing for Bitcoin to remain a futures-based product rather than an options-based one.
Despite these limitations, Bitcoin’s price reached a new all-time high of over $94,000, signaling a continued bullish trend in the market. According to Glassnode, Bitcoin options open interest surpassed $40 billion, with futures still holding the lead at $60 billion. However, with the introduction of Bitcoin ETF options, this gap may narrow in the near future.
Furthermore, Farside data revealed that U.S. spot Bitcoin ETFs saw a net inflow of $816.4 million, pushing the total net inflows to $28.5 billion. This marks a significant milestone for the cryptocurrency market, showing increasing interest from both institutional and retail investors. As the market for Bitcoin ETFs and options continues to expand, it is likely that we will see even more growth and innovation in the space.
