As a seasoned analyst with over two decades of experience in various financial markets, I’ve witnessed countless market events that have shaped investment strategies and reshaped industry landscapes. The recent surge in options contracts on BlackRock’s spot Bitcoin ETF, iShares Bitcoin Trust ETF (IBIT), is undoubtedly one such event that has caught my attention.
Trade volumes for options contracts on BlackRock’s spot Bitcoin exchange-traded fund (ETF), the iShares Bitcoin Trust ETF (IBIT), reached almost $2 billion, potentially contributing to Bitcoin’s record high surpassing $94,000.
As an analyst at Bloomberg ETF, I’m sharing the summary of IBIT’s first-day options trading: We saw a total notional exposure of approximately $1.9 billion, achieved through 354,000 contracts traded.
In his statement, he noted that it’s highly likely that these specific choices contributed to the record-breaking rise in Bitcoin prices today. The price of Bitcoin reached an unprecedented high of $94,105 on Coinbase on November 19th, according to TradingView.
In simple terms, Eric Balchunas, a senior ETF analyst at Bloomberg, stated that the initial day’s fund of $1.9 billion is quite extraordinary, and he likened it to the debut offering for Bitcoin exposure in the U.S., specifically the ProShares Bitcoin Strategy ETF (BITO), which raised approximately $363 million.
The fresh options agreements provide investors with the ability to trade shares of ETFs at specific prices they’ve set, enabling them to wager on its price fluctuations. The notional exposure quantifies the market exposure from this option position, taking into account Bitcoin price fluctuations and the overall worth of Bitcoin controlled by these option contracts.
For the initial day of trading for IBIT, the ratio of call-to-put trades stood at 0.225. This indicates a higher number of investors opted for calls, which are bets that Bitcoin will increase, rather than puts, which represent bets that Bitcoin won’t increase.
As an analyst, I find it quite optimistic, particularly considering the upcoming monthly contract expirations. These are essentially wagers that the value of Bitcoin will more than double within the following month.
Today’s market surge, as per former CNBC Africa host Ran Neuner, can be attributed to the initiation of the IBIT options.
When traders purchase options, market makers counterbalance their trades by purchasing the underlying Bitcoin Exchange-Traded Fund (ETF),” he explained. “This action leads to an extensive accumulation of the ETF, subsequently causing a significant increase in the acquisition of spot Bitcoin.
As a crypto investor, I was particularly excited when Joe Consorti, an industry executive, announced on November 19th that the recently approved contracts could open the way for listing Bitcoin Exchange-Traded Funds (ETFs) on spot markets. This development, in his words, would provide access to the most extensive and profound liquidity reserves globally.
He stated on November 20th that there’s a strong expectation in the market that Bitcoin’s closing price for the year will exceed $100,000, following the launch of the options.
On November 20th in the U.S., crypto asset manager Grayscale plans to introduce options for its Bitcoin ETFs that directly track the price of Bitcoin.
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2024-11-20 07:19