Key Points
- The CFTC’s recent notice may lead to the approval of Spot Bitcoin ETF Options.
- Bitcoin Options Open Interest has seen significant growth in 2024.
The Commodity Futures Trading Commission (CFTC) has recently issued a staff advisory regarding Bitcoin ETF Options. This announcement has provided some regulatory clarity and suggests that Bitcoin ETF Options could soon be a reality.
The U.S Securities and Exchange Commission (SEC) will be in charge of regulating these new Options. Although no official listing date has been disclosed, it is clear that the SEC’s approval is a major regulatory obstacle. According to Eric Balchunas, Bloomberg’s Senior ETF Analyst, the final step would be getting the green light from the Options Clearing Corporation.
Spot Bitcoin ETF Options Impact
One of the main outcomes of this development would be that Spot Bitcoin ETF Options could increase BTC exposure in the U.S, particularly in a legal context. This could potentially enhance market liquidity by attracting more institutional traders.
Spot Bitcoin ETF Options are designed to provide exposure to Bitcoin without the need to hold the underlying asset. This could lead to increased market speculation and potentially more volatility and pronounced price fluctuations. However, this added volatility could impact both bullish and bearish traders.
Current State of Bitcoin Derivatives
In November, Bitcoin bulls have shown a lot of activity, resulting in a rise in spot and derivatives volumes. The demand for Bitcoin in the derivatives segment recently reached an all-time high, surpassing the levels witnessed during the peak of the last bull run.
On 14 November, the total Bitcoin Options Open Interest peaked at $38.75 billion, more than double the Open Interest at the peak of the previous bull run in October 2021. At the start of 2024, the Open Interest was less than $5 billion, highlighting the significant growth in the Bitcoin derivatives segment this year. This figure is projected to increase even more once the Spot Bitcoin ETF Options are launched.
