Expert Claims Bitcoin ETF Options Won’t Curb Volatility

Jeff Park, the head of alpha strategies at Bitwise Asset Management, argues that Bitcoin ETF options are unlikely to diminish Bitcoin's inherent volatility.

He points out that traditional money management involves balancing supply and price stability, with central banks playing a crucial role. In contrast, Bitcoin’s supply is capped at 21 million, meaning holders must navigate significant price fluctuations without any guarantees.

Recently, the SEC granted approval for options trading linked to BlackRock’s iShares Bitcoin Trust (IBIT), enabling investors to gain more exposure to Bitcoin, the dominant cryptocurrency.

Park labeled this SEC decision as a transformative moment for the crypto landscape, marking the first regulated leverage on a limited-supply commodity in the financial arena.

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He further noted that the potential for Bitcoin’s synthetic exposure is set to increase substantially, enhancing the utility of Bitcoin ETFs. Options traders will benefit from capturing greater delta while maintaining lower premium costs.

Additionally, since Bitcoin’s implied volatility tends to rise along with its spot price, it experiences negative Vana. This means that during gamma spikes, Bitcoin’s price can rise sharply and rapidly.

There is literally zero chance that BTC ETF options will reduce volatility in the future.

Z.E.R.O.

From my H1 Letter: pic.twitter.com/bM91rxIT6g

— Jeff Park (@dgt10011) September 22, 2024

Alexander Stefanov