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The imminent launch of spot Bitcoin exchange-traded fund options in the United States may be a huge deal because extra liquidity should entice a new wave of institutional and retail investors, according to industry executive Joe Consorti.
“The floodgates for Bitcoin’s next evolution in financial markets are about to open,” as the first spot Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="null" target="null" text="null" title="null">BTC</a>) ETF options are set to start trading in the United States on Nov. 19, said Consorti, head of growth at Bitcoin custody firm Theya, in a video <a data-ct-non-breakable="null" href="https://x.com/JoeConsorti/status/1858666860960727249" rel="null" target="null" text="null" title="null">shared</a> on X on Nov. 19.
On Nov. 18, the Options Clearing Corporation (OCC) said it was <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/occ-launch-spot-bitcoin-etf-options-trading" rel="null" target="null" text="null" title="https://cointelegraph.com/news/occ-launch-spot-bitcoin-etf-options-trading">preparing</a> to launch the investment vehicles, <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/sec-options-blackrock-spot-bitcoin-etf" rel="null" target="null" text="null" title="https://cointelegraph.com/news/sec-options-blackrock-spot-bitcoin-etf">beginning with</a> the BlackRock iShares Bitcoin Trust (<a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/articles/blackrocks-bitcoin-etf" rel="null" target="null" text="null" title="https://cointelegraph.com/learn/articles/blackrocks-bitcoin-etf">IBIT</a>).&nbsp;
“The launch of spot Bitcoin ETF options, specifically for the IBIT vehicle, marks the beginning of a new era for price dynamics, volatility and institutional adoption,” Consorti said.&nbsp;
The head of ETP listings at Nasdaq, Alison Hennessy, <a data-ct-non-breakable="null" href="https://x.com/intangiblecoins/status/1858560436850831724" rel="null" target="null" text="null" title="null">said</a> the exchange intended to list and trade spot BTC ETF options as early as Nov. 19.
Spot Bitcoin ETF options are financial derivatives that give investors the right, but not the obligation, to buy or sell shares of spot crypto ETFs at predetermined prices.&nbsp;
Bloomberg’s senior ETF analyst Eric Balchunas <a data-ct-non-breakable="null" href="https://x.com/EricBalchunas/status/1858711503672590601" rel="null" target="null" text="null" title="null">said</a> that this was a “BFD,” sharing Consorti’s video on X on Nov. 19.&nbsp;
<blockquote class="twitter-tweet">
 Spot bitcoin ETF options begin trading on the Nasdaq tomorrow. Here's why it matters. [B2YB <a href="https://twitter.com/TheyaBitcoin?ref_src=twsrc%5Etfw">@TheyaBitcoin</a>] <a href="https://t.co/BgDXmXI66M">pic.twitter.com/BgDXmXI66M</a>— Joe Consorti ⚡️ (@JoeConsorti) <a href="https://twitter.com/JoeConsorti/status/1858666860960727249?ref_src=twsrc%5Etfw">November 19, 2024</a>
</blockquote>
Consorti said that options are the foundations of capital markets as they provide liquidity, price discovery and risk management tools, particularly for institutional investors that “drive a lot of the core of the market.”&nbsp;
He added: “This matters hugely because, in traditional markets, derivatives are 10 to 20 times the size of the underlying market cap,” but with Bitcoin, listed derivatives are less than 1% of the $1.8 trillion spot market cap.
Bitcoin derivatives are “vastly underdeveloped,” and this limits the market’s maturity because there is a “huge institutional demand” for these products from hedging and allocation perspectives, he said.&nbsp;
Consorti said that most Bitcoin derivatives are traded offshore or OTC (over-the-counter) on venues such as Deribit, which currently has $31 billion in open interest, while US investors are locked out.&nbsp;
The US equity markets are the largest and most liquid in the world, comprising 44% of the $109 trillion global equity market, he said, before adding:
<blockquote>
 “Listing options on Bitcoin ETFs brings BTC into the largest capital market in the world, and unlocks unprecedented opportunities because of this, namely liquidity in depth.”&nbsp;
</blockquote>
Previously excluded retail investors can now join the Bitcoin derivatives market, “significantly expanding the investor base,” he said.&nbsp;
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/cftc-united-states-spot-bitcoin-etf-options-sec" rel="null" target="null" text="null" title="null">Bitcoin ETF options pass ‘second hurdle’ with CFTC clearance</a>
Consorti said that as derivatives markets grow, BTC will follow the path of equities and commodities, where derivatives are many times the size of the spot market. This may unleash trillions of dollars in potential trading volume, he said.&nbsp;
“Listing options on ETFs opens the doors to the largest and deepest liquidity pools on the planet,” and major market makers, institutional capital, and retail investors can now all “participate at scale.”&nbsp;
In October, trading firm QCP Capital <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bitcoin-etfs-liquidity-boost-sec-nyse-etf-options-approval-qcp" rel="null" target="null" text="null" title="null">said</a> Bitcoin ETF liquidity would surge after the SEC approved options trading on the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE).
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/fbi-tokens-ai-crypto-wash-trades-is-it-legal/" rel="null" target="null" text="null" title="null">Legal issues surround the FBI’s creation of fake crypto tokens</a>

Why US spot Bitcoin options launch is such a big deal

Cointelegraph

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