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Bitcoin ETF options may attract $500M in new interest

Bitcoin ETF options may attract $500M in new interest

GrafaGrafa2024/09/30 08:20
By:Mahathir Bayena

The U.S. spot Bitcoin (CRYPTO:BTC) exchange-traded fund (ETF) market is witnessing a surge in trading alternatives, including the introduction of options trading.

According to a report by CryptoQuant, this development could attract long-term investors and bring additional liquidity to the Bitcoin ecosystem.

However, it may also increase the paper supply of Bitcoin, allowing investors to gain exposure without purchasing the actual asset.

The U.S. Securities and Exchange Commission (SEC) recently approved the listing of BlackRock’s iShares Bitcoin Trust (IBIT), marking a significant step forward for institutional adoption of crypto-related financial products.

Options are derivative contracts that allow investors to speculate on price movements without holding the underlying asset.

Analysts suggest this will encourage a deeper integration of cryptocurrencies into traditional financial markets.

CryptoQuant noted that the rise in Bitcoin options trading on platforms like the Chicago Mercantile Exchange (CME) has seen record growth this year.

On March 12, open interest in Bitcoin options reached nearly $500 million, a five-fold increase from last year’s peak.

These options offer traders the ability to invest with longer horizons, with many contracts expiring between one and three months, while a notable portion has terms exceeding four months.

Despite the benefits, options trading can enable investors to long or short Bitcoin without actually buying it.

This trend was evident in the 2022 bear market when the supply of Bitcoin in futures markets grew significantly as traders shorted the asset.

At the time of writing, the Bitcoin price was $64,647.91.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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