BlackRock’s iShares Bitcoin Trust (IBIT) made history with the introduction of the first U.S. spot Bitcoin ETF options on Tuesday, providing a major head start over competing products that began trading the following day.
The IBIT ETF, valued at $44 billion, saw impressive trading activity, with its options reaching over $2 billion in notional value on the first day. The ETF itself experienced over $4 billion in trading volume, ranking just behind major ETFs like SPDR S&P 500 (SPY), Invesco QQQ (QQQ), and iShares Russell 2000 (IWM), which have much larger market caps, according to data from Coinglass.
Bloomberg’s senior ETF analyst Eric Balchunas praised the strong debut of the IBIT options but noted that the product has not yet reached the scale of the largest ETFs. He pointed out that the $1.9 billion in first-day trading is remarkable, especially when compared to BITO’s $363 million debut after four years on the market. However, Balchunas also noted that the 25,000-contract position limit currently in place prevents the options from achieving the same scale as top ETFs.
The 25,000-contract cap is one of the key differences between Bitcoin ETF options and traditional financial products, with regulators imposing this limit to prevent market manipulation. This cap has raised concerns in the industry, with some suggesting that it could limit the growth of Bitcoin options.
Jeff Park, head of Alpha Strategies at Bitwise, criticized the restrictive position limits and explained that the exercisable risk for IBIT options represents just 0.5% of the ETF’s total shares, much lower than the 7% seen with traditional ETFs. Park also expressed concern that the CME Group, which primarily focuses on Bitcoin futures, may be pushing for Bitcoin to remain a futures-based product, rather than an options-based one.
Despite these regulatory challenges, Bitcoin’s price surged to over $94,000, a new all-time high, signaling strong demand for Bitcoin-linked products. According to Glassnode data, options open interest in Bitcoin reached $40 billion, with futures still leading at $60 billion.
In addition, Farside data revealed that U.S. spot Bitcoin ETFs experienced a net inflow of $816.4 million, bringing the total net inflows to $28.5 billion. As the market for Bitcoin ETFs and options continues to evolve, both institutional and retail demand are expected to grow, solidifying the product’s place in the financial landscape.
