The Commodity Futures Trading Commission (CFTC) has issued a staff advisory indicating that Bitcoin ETF options could soon be approved.
Impact of Bitcoin ETF Options
The approval of Spot Bitcoin ETF Options could increase BTC exposure in the US, particularly from a legal standpoint. This could enhance market liquidity by attracting more institutional traders. Options that do not require holding the physical asset could lead to increased market speculation and volatility.
Current State of Bitcoin Derivatives
In November, significant activity by Bitcoin bulls led to a rise in spot and derivatives volumes. On November 14, total Bitcoin Options Open Interest peaked at $38.75 billion, more than doubling the peak during the last bull run in October 2021. At the start of 2024, Open Interest was less than $5 billion, highlighting significant growth in the Bitcoin derivatives segment this year.
Regulatory Aspects and Market Potential
According to Eric Balchunas, Bloomberg’s Senior ETF Analyst, the final step for approval would be getting the green light from the Options Clearing Corporation. The approval of this financial instrument could be a significant step in increasing trading volumes and open positions in Bitcoin derivatives.
Regulating Bitcoin ETF options provides additional opportunities for institutional investors and could significantly change the landscape of Bitcoin derivatives trading.
