- The latest announcement from CFTC seemed to pave the way for the green light for Spot Bitcoin ETF options
- It’s worth looking at its potential impact and how Bitcoin Options Open Interest has grown so far in 2024
Bitcoin ETFs have done a lot so far this year in paving the way for institutional liquidity. ETFs don’t stop there, however, with a recent CFTC notice showing that Bitcoin ETF options may also be in the pipeline.
The Commodity Futures Trading Commission (CFTC) issued a staff advisory regarding Bitcoin ETF options on Friday. Tthe official press release also provided some regulatory clarity. It revealed that the new Options will be regulated by the US Securities and Exchange Commission (SEC).
As for the dates of their listing, no official date has been revealed. However, Bloomberg’s Senior ETF Analyst Eric Balchunas noted that SEC approval is the second biggest regulatory hurdle. He also revealed that the green light from the Options Clearing Corporation would be the last remaining step before Bitcoin ETF Options would finally hit the market.
Assessing the Impact of Spot Bitcoin ETF Options
The biggest impact of this development is that Spot Bitcoin ETF options will increase exposure to BTC in the United States. Especially in a legal context. It could potentially increase market liquidity by attracting more institutional traders.
The whole idea behind Spot Bitcoin ETF Options is to lend exposure to BTC, without having to hold the underlying asset. The Options will also pave the way for more speculation in the market. A possible outcome could be more volatility and amplified price swings.
The extra volatility could be a double-edged sword as it could affect both the bulls and bears.
What is the state of Bitcoin derivatives so far?
Bitcoin bulls have been extremely active in November so far. This activity was characterized by an increase in spot and derivatives volumes.
Demand for Bitcoin in the derivatives segment recently reached the highest level in history. In fact, the recent levels have been higher than the levels observed during the peak of the previous bull run.
Source: Coinglass
Total Bitcoin Options Open Interest peaked at $38.75 billion on November 14. For context, this was more than double the amount of Open Interest towards the peak of the previous bull run in October 2021.
Moreover, by the beginning of 2024, the level of Open Interest was less than $5 billion. This puts into perspective how much the Bitcoin derivatives segment has grown so far this year. In fact, this figure can be expected to rise even higher once the Spot Bitcoin ETF options are launched.