On October 18, the Securities and Exchange Commission (SEC) of the United States gave its approval to the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list options for spot Bitcoin (BTC) exchange-traded funds (ETFs), a development that had been highly anticipated.
As a result of this approval, options trading will now be accessible to the 11 ETF providers that have been approved by the NYSE. These include well-known names such as Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree’s Bitcoin Fund, Grayscale’s Bitcoin Trust, Grayscale Bitcoin Mini Trust, Bitwise Bitcoin ETF, BlackRock’s iShares Bitcoin Trust ETF, and the Valkyrie Bitcoin Fund.
The Chicago Board Options Exchange had also submitted an application to list options for the spot Bitcoin ETF providers, and this application was filed in August 2024 through a proposed rule change. This change in regulatory policy now places Bitcoin ETF options in the same category as other commodity-based ETFs that the SEC has approved to be listed on the CBOE, with the exception of Grayscale’s Bitcoin Mini Trust.
The introduction of options for Bitcoin ETFs is expected to have a significant impact on the markets, particularly through increased liquidity and the potential for short squeezes. Investors believe that this will inject much-needed liquidity into the Bitcoin markets, which could act as a catalyst for higher price action.
Jeff Park, an executive at Bitwise, stated that the approval of options for ETF products represents a major improvement from platforms such as LedgerX and Deribit, which lack central guarantors. Park also suggested that the options could lead to situations where highly overleveraged short traders are forced to buy Bitcoin to cover their positions, a phenomenon known as “short-squeezing”.
According to Tom Dunleavy, the managing partner of investment firm MV Global, the introduction of options also serves as a mechanism to reduce the high volatility of Bitcoin and create more stability in the markets over time.
In related news, the SEC has once again delayed its decision on spot Ethereum ETF options. This decision is expected to have an impact on the Ethereum price, with experts predicting that it will lag behind Bitcoin’s surge for several months.
Overall, these developments in the world of Bitcoin ETF options are expected to bring about significant changes in the markets, providing new opportunities for investors and potentially affecting the price and stability of Bitcoin and other cryptocurrencies.