Bitcoin ETF Options Start Trading, Opening a New Phase in Cryptocurrency Investment

Options based on BlackRock's iShares Bitcoin Trust ETF (IBIT) started trading today (Tuesday), opening a new phase in cryptocurrency investment.

Options based on BlackRock's iShares Bitcoin Trust ETF (NYSE:IBIT) began trading on Tuesday, marking a new chapter in cryptocurrency investment. Within the first 60 minutes of the fund's launch on the Nasdaq, 73,000 contracts were traded, ranking among the top 20 most active nonindex options, according to CNBC.

Options provide investors with an alternative avenue to either hedge their Bitcoin exposure or speculate on its price movements. The IBIT options, being launched on the Nasdaq, have quickly garnered attention with their high trading volumes.

Bitcoin ETF Options Explained

Options trading allows investors to capitalize on Bitcoin's volatility without having to directly own the asset. By setting predetermined buy or sell prices, traders can craft strategies to profit whether Bitcoin prices rise or fall. This mechanism provides a level of risk management that is not available in spot Bitcoin trading.

While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.

No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.

In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC's first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John's.

One could now argue that as Bitcoin prices continue to soar, reaching new all-time highs, Hanyecz might as well have paid for the pizzas in fiat currency.

Bitcoin prices today are up 0.31% to $24,183.3. This follows a 6.5% gain over the past week, and a 43.7% rise year-to-date. In the meantime, keep an eye on our cryptocurrency live prices page.

As Bitcoin's popularity grows, so does the demand for options on its ETFs. These options offer a structured way for retail investors to manage risk and opportunities, especially given the unpredictable nature of Bitcoin's price movements.

Historically, options markets for popular ETFs, such as the Invesco QQQ (NASDAQ:QQQ) and SPDR S&P 500 (NYSE:SPY), have seen higher trading activity than the ETFs themselves. This trend is also expected to be observed in the Bitcoin ETF options markets.

Bitcoin ETFs Gain Momentum

The launch of ETF options is also set to further expand the universe of Bitcoin ETFs in the market. Other funds, such as the Grayscale Bitcoin Trust (OTCPK:GBTC) and Bitwise Bitcoin ETF (NYSE:BITB), among others, are awaiting approval from the Securities and Exchange Commission (SEC) to begin options trading.

As more Bitcoin ETFs are approved and begin trading, the options markets for these funds are also likely to grow substantially. This could ultimately lead to a reduction in Bitcoin's notorious price volatility, which may encourage more cautious investors to enter the market.

In October, the US Securities and Exchange Commission allowed 11 exchange-traded funds (ETFs) to list and trade options based on spot Bitcoin prices on the New York Stock Exchange. Early this year, the regulator approved spot Bitcoin ETFs to track the cryptocurrency’s value. The move marked a significant development for Bitcoin and the wider cryptocurrency community.

Some of the approved funds included Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Grayscale Bitcoin Trust BTC, and iShares Bitcoin Trust ETF.