According to James Seyffart, an analyst at Bloomberg Intelligence, options on Bitcoin exchange-traded funds (ETFs) are expected to launch in the U.S. by the first quarter of 2025.
Per a report by Alex O’Donnell for Cointelegraph, speaking at the Permissionless conference on October 9, Seyffart said that while it’s possible options could be approved before the end of the year, early 2025 is more likely.
On September 20, the U.S. Securities and Exchange Commission (SEC) authorized Nasdaq to list options tied to BlackRock’s spot Bitcoin ETF, the iShares Bitcoin Trust (IBIT). However, the options are still awaiting final approval from the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC). Seyffart pointed out that, unlike the SEC, the CFTC and OCC don’t have strict deadlines, meaning the process could be delayed further.
Options are financial contracts that give traders the right to buy or sell an underlying asset at a specified price. In the U.S., the OCC steps in to settle trades if one party fails to fulfill their obligations.
Options are a popular tool among financial advisers, especially for managing market volatility. Seyffart noted that many advisers remain concerned about Bitcoin’s price swings, particularly downward movements. Offering Bitcoin ETF options could help advisers mitigate these risks and feel more comfortable with the asset.
In a note released on September 21, Jeff Park, Head of Alpha Strategies at Bitwise Asset Management, said that the SEC’s approval to list and trade Bitcoin ETF options marks a significant milestone for the financial world, representing what he described as an “extraordinary upside of volatility” (vol of vol) for financial history. He emphasized the monumental nature of this advancement for the crypto market, calling it the most important development yet for Bitcoin’s future.
One of the most crucial aspects of this shift, according to Park, is the fact that Bitcoin’s notional value will now be “fractionally banked” within ETF options. He clarified that Bitcoin’s greatest strength—its capped supply—has also been one of its biggest challenges, as it limited Bitcoin’s ability to generate synthetic leverage. With this new development, Bitcoin will now be supported by a regulated market where the Options Clearing Corporation (OCC) ensures protection for clearing members against counterparty risk. This change, he noted, allows Bitcoin to access liquidity-driven leverage opportunities, thereby amplifying its financial potential compared to traditional spot markets.
Additionally, Park highlighted how Bitcoin can now express “duration as part of the leverage calculation” for the first time, providing traders with access to more stable, long-term positions. He compared this to rolling over daily options, which comes with its own inefficiencies. Bitcoin options, in contrast, offer more robust, cost-effective strategies, making them a compelling alternative for investors looking for long-term exposure. He stressed that investors can now gain greater upside potential with less premium outlay compared to traditional fully collateralized positions.
Park also elaborated on Bitcoin’s volatility skew—what he calls a “volatility smile”—where upward volatility is cheaper than downside volatility. This characteristic is rare in traditional assets and offers Bitcoin an additional edge in market activity. He explained how this plays out in the practical market, particularly how traders can take advantage of Bitcoin’s negative vanna (a measure of how the delta of an option changes with price movements). In Park’s view, this characteristic acts like a “refueling rocket,” accelerating Bitcoin’s price momentum and compounding the impact of its leverage potential.
Most importantly, Park asserted that Bitcoin cannot be diluted, unlike traditional stocks where new shares can be issued, further strengthening the cryptocurrency’s appeal in leveraged scenarios. This, according to him, sets Bitcoin apart from commodities like oil or natural gas, which face physical delivery constraints. Park concluded by stating that the approval of Bitcoin options marks the first time a regulated, leveraged market will be available for Bitcoin, which he believes is a game-changing development for the cryptocurrency.
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