On October 18, the U.S. Securities and Exchange Commission (SEC) approved options trading on spot Bitcoin exchange-traded funds (ETFs) through the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE).
Details of SEC Approval
This development is pivotal for the 11 ETF providers now authorized to offer options, including renowned names like Fidelity, ARK Invest, and Grayscale. Investors can now trade options on popular Bitcoin ETFs such as Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, and the VanEck Bitcoin Trust.
Impact on Bitcoin Market
This move is expected to boost liquidity in the Bitcoin market, facilitating easier buying and selling for investors. Bitwise executive Jeff Park highlighted the significance of this upgrade compared to previous platforms like LedgerX and Deribit, which lack central guarantees. Exciting market movements such as short squeezes might occur, where traders betting against Bitcoin could be forced to buy it to cover their positions.
Investor Prospects
Tom Dunleavy from MV Global added that options could help stabilize Bitcoin’s notorious volatility over time. This indicates that while investors can benefit from price movements, the market may also become smoother and less erratic. With options trading commencing, all eyes are on the Bitcoin market to observe how this new avenue impacts prices and trading dynamics.
The SEC's approval marks an exciting new chapter for Bitcoin ETFs and their potential impact on the investment world.