Will Bitcoin Options Trading Ignite Market Volatility?

Experts are commenting on the potential impact of options trading for spot Bitcoin ETFs, including BlackRock's iShares Bitcoin Trust, on the cryptocurrency market.

The U.S. Securities and Exchange Commission (SEC) recently allowed NYSE American LLC and Cboe Exchange, Inc. to list and trade these options, which is expected to create new opportunities for U.S. retail investors who previously lacked access to continuous exchange markets.

Kbit CEO Ed Tolson noted that this development addresses a significant market gap, enabling individual investors to engage in riskier trades with asymmetric payouts. He expects individual speculation to be the primary use case for IBIT options, while institutional market makers may amplify volatility by buying as prices rise and selling as they fall.

Michael Harvey from Galaxy Digital also anticipates a rise in near-term volatility driven by retail investors. However, he believes that institutional participants will stabilize the market over time with yield-seeking strategies. He highlighted that regulated Bitcoin ETF options could attract knowledgeable institutional investors who have yet to enter the market.

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As options trading expands in the Bitcoin ETF sector, analysts are closely monitoring its impact on Bitcoin’s synthetic notional value. Harvey pointed out that while other commodity markets often see the notional value of options exceed physical supply, he does not expect long-term pricing disruptions for Bitcoin. Ultimately, he believes that the alignment of speculators’ and hedgers’ interests will lead to a more liquid market.

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Alexander Stefanov

With over 8 years of experience in the cryptocurrency and blockchain industry, Alexander is a seasoned content creator and market analyst dedicated to making digital assets more accessible and understandable. He specializes in breaking down complex crypto trends, analyzing market movements, and producing insightful content aimed at educating both newcomers and seasoned investors. Alexander has built a reputation for delivering timely and accurate analysis, while keeping a close eye on regulatory developments, emerging technologies, and macroeconomic trends that shape the future of digital finance. His work is rooted in a passion for innovation and a firm belief that widespread education is key to accelerating global crypto adoption.