On Friday, BlackRock’s bitcoin exchange-traded fund (ETF), known as IBIT, achieved a significant milestone by surpassing the total open interest in bitcoin options trading on the offshore platform Deribit. This development signals a notable shift in the institutional adoption of regulated cryptocurrency derivatives in the United States.
The dollar value of open or active IBIT options contracts on Nasdaq reached $27.61 billion, slightly exceeding Deribit’s $26.90 billion, according to data from the decentralized crypto volatility protocol Volmex. This achievement is particularly remarkable given that Deribit has been operational since 2016, while IBIT options have only been available for two years.
This shift indicates that the U.S. market for regulated bitcoin investment and derivatives is gaining traction, potentially encouraging more Wall Street institutions to explore digital assets. A robust regulated market could lead to more mature price discovery mechanisms.
Sidrah Fariq, Deribit’s Global Head of Retail Sales and Business, noted that IBIT’s growth is beneficial for the overall crypto derivatives ecosystem. She explained, “U.S. retail can’t onboard platforms like Deribit, so iShares Bitcoin Trust (IBIT) options give them direct access to regulated leverage and options exposure.” Fariq also highlighted that current macroeconomic conditions, including supply chain uncertainties and geopolitical risks, are driving demand for hedging and options strategies.
Options are derivative contracts that provide the purchaser the right to buy or sell an underlying asset at a predetermined price within a specified timeframe. A call option allows the holder to buy, while a put option allows for selling.
Open interest is a key metric that measures market size and participation; a higher open interest indicates a deeper and more liquid market. Traders utilize options for various purposes, including hedging existing positions, speculating on price movements, and generating additional income from holdings.
One popular strategy involving IBIT options is the covered call, which allows investors to capitalize on bitcoin’s implied volatility while holding the ETF and shorting IBIT calls at prices above the ETF’s current market value. This strategy has been employed by traders with actual bitcoin holdings on Deribit for years.
While both IBIT and Deribit now exhibit similar scales of open interest, they cater to different types of investors, reflecting distinct trader sentiments. According to Volmex, the majority of open interest in IBIT call options suggests expectations of a price increase to approximately $109,709 for bitcoin in the near term, which is about 41% higher than its current price of $77,400. In contrast, Deribit options indicate a more conservative expectation of a rally to around $106,000.
Analysis shows that IBIT options have a longer average expiry date compared to Deribit options, with traders favoring October 2026 expiries for IBIT and August expiries for Deribit. This suggests that IBIT holders are generally more patient, reflecting a longer-term investment strategy.
Moreover, IBIT’s implied volatility is currently higher than that of Deribit’s bitcoin options. Volmex attributes this difference to a structural factor: ETF holders, who cannot easily short bitcoin directly, tend to buy put options as their primary means of hedging, thereby elevating IBIT’s implied volatility.
In summary, IBIT’s rapid ascent within the options market is noteworthy and indicates a growing acceptance of regulated bitcoin products among institutional investors. However, the two markets serve different investor bases, with IBIT focusing on onshore, regulated access to bitcoin and Deribit catering to a global audience.
Fariq emphasized that this development should not be viewed as competition but rather as an expansion of the market. She stated, “As more participants get comfortable trading options via IBIT, it ultimately feeds into the broader ecosystem, and venues like Deribit benefit from increased sophistication and flow.”
BlackRock's bitcoin ETF, IBIT, has surpassed Deribit in options trading volume, indicating a significant shift towards institutional adoption of regulated crypto derivatives in the U.S. This development may encourage more Wall Street firms to engage with digital assets, enhancing market maturity.