This article is also available in Spanish.
BlackRock, the world’s largest asset manager, has officially launched options trading for its Bitcoin ETF, the iShares Bitcoin Trust (IBIT). The debut comes after the ETF received regulatory approval in January and has since attracted significant investors. influx.
Increased liquidity and reduced volatility on the horizon
According to Bloomberg, the introduction of options trading on the $43 billion iShares Bitcoin Trust is expected to reduce volatility while expanding Bitcoin’s investor base.
Related reading
Alex Thorn, head of enterprise-wide research at Galaxy Digital, said on a Bloomberg TV show.ision interview that as Bitcoin becomes more widely held, its volatility is likely to decrease. “Options will help smooth out volatility, and as volatility decreases, people will be able to take larger positions,” he explained.
Thorn noted that a decrease in volatility could change investor sentiment, encouraging them to view Bitcoin as a viable asset for fundamental use cases rather than just a speculative bet.
The availability of options will also allow institutions to hedge their positions more effectively, thereby increasing liquidity and potentially impacting retail trading over the period. bullish market conditions.
Call options dominate BlackRock’s Bitcoin ETF from day one
Bloomberg ETF analysts Eric Balchunas and James Seyffart reported that on the first day of options trading, total notional exposure for IBIT reached nearly $1.9 billion, spread across 354,000 contracts.
Of these contracts, 289,000 were calls, while 65,000 were puts, resulting in a bullish call/put ratio of 4.4:1. Seyffart claimed that this considerable interest in call options contributed to Bitcoin hitting a new all-time high of $94,000 during Tuesday’s trading session for the market’s leading crypto.
Balchunas, on the other hand, underlines that the majority of options contracts are bullish, particularly the December 20 call option, which essentially bets that the price of Bitcoin will double within a month. This means that based on current prices, investors expect BTC to hit a new all-time high of just over $180,000 by this date.
The put/call volume ratio for BlackRock’s Bitcoin ETF was “impressive,” according to Balchunas, who noted that the 0.17 ratio indicates strong bullish feeling compared to other ETFs, like the SPDR S&P 500 ETF (SPY) with a ratio of 1.1.
Related reading
Market expert Marty Party pointed out in a social media post that options on iShares Bitcoin Trust will be settled in real Bitcoin. This means that when an options contract is exercised, settlement will involve delivery of Bitcoin, providing investors with direct exposure to BTC price movements without the need to interact with crypto exchanges.
At the time of writing, the market’s leading digital asset is trading at $91,580, up 4% on the weekly time frame following today’s bullish move to its new high.
Featured image of DALL-E, chart by TradingView.com
