Bitcoin ETF options divide analysts – ‘With all due respect…’

  • Analysts agreed U.S. BTC options could inject more liquidity into BTC markets. 
  • But, there were divided views on volatility and price impact in the long run. 

As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed the evolution of various investment products and their impact on asset prices. The recent approval of U.S. spot Bitcoin ETF options by the SEC is yet another intriguing development that warrants careful consideration.


There’s been an increase in market analysis following the approval of additional U.S. exchange-traded fund (ETF) options for Bitcoin (BTC), based on Bitcoin spot markets.

On October 18th, the U.S. Securities and Exchange Commission (SEC) approved the trading of certain products on both the New York Stock Exchange (NYSE) and Chicago Board Options Exchange (Cboe).

The NYSE American has received approval to introduce options trading for Fidelity’s Bitcoin fund (FBTC) and ARK 21Shares’ ARKB, while Cboe will facilitate the trading of Grayscale’s GBTC, mini BTC, and Bitwise’s BTIB. In simpler terms, these financial institutions can now offer options for specific Bitcoin funds, and different platforms are authorized to trade certain Bitcoin products.

This approval follows the recent clearance of BlackRock’s IBIT options.

So, what’s the potential impact on the BTC market and price? 

Mixed views on U.S. BTC ETF options

Based on certain experts’ opinions, this situation might lead to increased price fluctuations and enhanced market fluidity in Bitcoin.

In simpler terms, using options enables skilled traders to make predictions about Bitcoin’s price movement and manage potential risks (such as hedging) without actually having to possess the physical Bitcoin itself.

Last month, after IBIT options approval, Anthony Pompiliano, a BTC investor, stated that it would reduce BTC volatility and limit its upside potential. 

Granting approvals for options on Blackrock’s Bitcoin ETF could lead to increased institutional investment in Bitcoin. This increased institutional involvement may help reduce Bitcoin’s price volatility and potentially cap its dramatic upward price movements.

However, Bitwise’s Jeff Park viewed the approval as a net positive for BTC volatility, liquidity, and price. He countered what he felt was a flawed take on the U.S. BTC ETF options. 

Bitcoin ETF options divide analysts – ‘With all due respect…’

Park’s sentiment was shared by most analysts who shared their views with The Block.

Ed Tolson, CEO of Kbit, stated, 

Market intermediaries, responsible for balancing transactions, might find themselves in a position where they are ‘short gamma.’ In simpler terms, this implies they could purchase stocks when prices increase and sell them when prices decrease. This action could lead to an increase in market fluctuations.

Michael Harvey, who leads franchise trading at Galaxy Digital, anticipates a temporary increase in market fluctuations. Over time, this volatility might decrease.

In the beginning, individual traders might dominate the market more than institutional investors, potentially leading to increased price fluctuations due to their collective actions. However, as institutions start employing strategies to generate income, like selling volatility, over time, this could help reduce the overall market volatility compared to what we witness currently.

Harvey’s outlook on volatility mirrored Pompiliano’s projection. 

To sum up, experts believed that the approval would boost the amount of cash flowing in Bitcoin markets.

However, there were mixed takes on volatility and price impact in the short and long term. 

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2024-10-24 04:08