Bitcoin (BTC) made new highs on Tuesday as Wall Street rolled out its latest product, almost guaranteed to increase the exposure of the digital currency among financial institutions: options trading on spot bitcoin exchange-traded funds (ETFs). At press time, the top crypto was trading above $94,000, up more than 4% in the last 24 hours. This breaks its previous record of $93,450, set on Nov. 13.
Meanwhile, the CoinDesk 20 — an index of the top 20 cryptocurrencies by market capitalization except for stablecoins, meme coins, and exchange tokens — is up about 0.3%. The index’s biggest winner was (HBAR), up 9%, while the biggest loser was {{POL}}, down 0.8%.
Options contracts allow investors to buy or sell an asset at a specific price and at a pre-determined time. While the CME already offered bitcoin options, the spot bitcoin ETF options are a big deal for retail participants and financial institutions alike, according to Noelle Acheson, former head of market insights at Genesis.
“A deeper onshore derivatives market will enhance the growing market sophistication,” Acheson posted on X. “This will reinforce investor confidence in the asset, bringing in new cohorts while enabling a greater variety of investment and trading strategies.”
“Institutions will be attracted to the greater flexibility and access to high-volume exposure,” Acheson added. “Options offer deeper granularity in expressing an investment opinion, and can boost exposure relative to outlay, making them especially attractive to large players.” Only one of the eleven U.S.-based spot bitcoin ETFs — BlackRock’s IBIT — currently has options available so far, and the demand has been strong.
“A few hundred million so far in options volume on IBIT (a ton for day one),” Bloomberg ETF analyst Eric Balchunas posted on X. Balchunas further noted that the vast majority of the contracts were calls, meaning bets that bitcoin’s price will keep rising.
