- Experts concurred that U.S. Bitcoin options could enhance liquidity in BTC markets.
- Nonetheless, perspectives on volatility and long-term price effects were varied.
Numerous market analyses have emerged following the regulator’s approval of additional U.S. spot Bitcoin [BTC] ETF options.
On October 18th, the U.S. Securities and Exchange Commission (SEC) authorized these products to be traded on the NYSE (New York Stock Exchange) and Cboe (Chicago Board Options Exchange).
NYSE American received approval to provide options for Fidelity’s BTC fund, FBTC, and ARK 21Shares’ ARKB. Concurrently, Cboe will facilitate trades for Grayscale’s GBTC, mini BTC, and Bitwise’s BTIB.
This endorsement follows the recent clearance of BlackRock’s IBIT options.
What could be the potential implications for the BTC market and pricing?
Diverse opinions on U.S. BTC ETF options
Some analysts believe this could lead to increased volatility and enhanced liquidity in Bitcoin.
For reference, options enable professional traders to speculate and utilize risk management (hedging) strategies without holding the underlying BTC asset.
Last month, following the approval of IBIT options, BTC investor Anthony Pompliano asserted that this would decrease BTC volatility and restrict its upside potential.
“The authorization of options on BlackRock’s Bitcoin ETF will lead to greater institutional adoption of the asset, which will curtail volatility & cap Bitcoin’s explosive gains.”
In contrast, Bitwise’s Jeff Park expressed that this approval is a net gain for BTC’s volatility, liquidity, and price. He disagreed with what he perceived as a misguided assessment of U.S. BTC ETF options.
Source: X
Park’s perspective was echoed by the majority of analysts who shared their insights with The Block.
Ed Tolson, CEO of Kbit, remarked,
“Institutional market makers, anticipated to engage in these trades, will likely be short gamma. This indicates they might need to buy as prices increase and sell as they decrease, possibly heightening volatility.”
Conversely, Michael Harvey, head of franchise trading at Galaxy Digital, predicted a temporary rise in volatility, which might subside over time.
“We anticipate retail traders will initially surpass institutions, potentially increasing volatility. However, as institutions implement yield-generating strategies like selling volatility, this may mitigate the overall volatility we currently observe.”
Harvey’s prediction on volatility was in line with Pompliano’s outlook.
In summary, analysts expressed confidence that the approval would introduce more liquidity into BTC markets.
Nevertheless, opinions varied regarding the effects on volatility and pricing both in the short and long term.
