• Advertise with us
  • Pricing
  • Submit News
Instagram Twitter Facebook Telegram Youtube Linkedin
EdaFace Newsfeed
EdaFace Newsfeed EdaFace
  • News
    • Price Analysis

    Main News

    • Crypto News
    • Bitcoin and BTC
    • Altcoin News
    • Security & Hacks
    • ICO & Token Sales
    • Interviews & Profiles

    Information

    • Press Release
    • Research Report
    • Regulations, Law & Policy
    • Community/Guest Post
    • Events & Conferences
    • Tutorials & Guides

    Market

    • Technical Analysis
    • Price Analysis
    • Cryptocurrency Price Prediction
    • DeFi (Decentralized Finance)
    • Mining & Staking

    Other Categories

    • NFTs & Digital Art
    • Opinion & Editorials
    • Tech Innovations
  • Cryptocurrencies
    • Coin Ranking
    • Trending
    • EDA Token
  • Exchanges
    • Spot
    • Derivatives
    • DEX
    • EDA Plantation
  • Verification Centre
    • Rug Pull Check
    • Blockchain Ecosystem
    • EDA Token
  • MarketPlaces
    • NFT Marketplace
    • Digital Literature
    • Digital Mall
    • P2P Market
    • Metaverse
  • EDA Academy
More
  • News
    • Price Analysis
  • Cryptocurrencies
    • Coin Ranking
    • Trending
    • EDA Token
  • Exchanges
    • Spot
    • Derivatives
    • DEX
    • EDA Plantation
  • Verification Centre
    • Rug Pull Check
    • Blockchain Ecosystem
    • EDA Token
  • MarketPlaces
    • NFT Marketplace
    • Digital Literature
    • Digital Mall
    • P2P Market
    • Metaverse
  • EDA Academy
Reading: Bitcoin Volatility Expected to Surge After SEC Approves Options on Spot Bitcoin ETFs: Reveals Analyst
Share
Sign In
EdaFace Newsfeed
EdaFace Newsfeed EdaFace
EdaFace Newsfeed > Latest News > Crypto News > Bitcoin Volatility Expected to Surge After SEC Approves Options on Spot Bitcoin ETFs: Reveals Analyst
Crypto News

Bitcoin Volatility Expected to Surge After SEC Approves Options on Spot Bitcoin ETFs: Reveals Analyst

vitalclick
Last updated: October 22, 2024 9:48 pm
7 months ago
Share
SHARE

Contents
Retail Traders Boost Volatility; Institutions May Stabilize LaterSEC Caps Options Positions at 25,000 Contracts

The U.S. Securities and Exchange Commission (SEC) has approved the listing and trading of options on spot Bitcoin exchange-traded funds (ETFs), like BlackRock’s iShares Bitcoin Trust (IBIT). Analysts say this move is likely to make Bitcoin’s price more volatile. With options available on these ETFs, investors can bet on Bitcoin’s future price changes more easily. This could lead to bigger swings in its value.

Retail Traders Boost Volatility; Institutions May Stabilize Later

Analysts predict that introducing options on spot Bitcoin ETFs like BlackRock’s iShares Bitcoin Trust (IBIT) will lead to increased volatility in the underlying asset.

On Friday, the U.S. Securities and Exchange Commission (SEC) approved NYSE American LLC and Cboe Exchange, Inc. to list and trade options on multiple spot Bitcoin exchange-traded funds.

Also read: BlackRock’s Bitcoin Game, Strategy or Speculation?

Ed Tolson, CEO of Kbit said that U.S. retail traders who currently lack access to perpetual swap markets might now turn to IBIT options to achieve an asymmetric payout structure, thereby filling a market gap for these investors.

Tolson indicated that retail speculation will likely be the primary use case for IBIT options. He explained that institutional market makers, who are expected to take the opposite side of these trades, will likely be short gamma. This means they may need to buy as the price rises and sell as it falls, potentially amplifying volatility.

Michael Harvey, Head of Franchise Trading at Galaxy Digital, also anticipates increased volatility in the short term. He noted that they expect retail traders to outnumber institutions initially, which could elevate volatility. Over time, as institutions adopt yield-generation strategies, such as selling volatility, this could dampen the overall volatility observed today.

Michael emphasized that the regulated nature of U.S.-based spot Bitcoin ETF options is likely to attract institutional investors who are curious about cryptocurrencies but have yet to enter the market. He noted that this development provides institutions with a new way to gain exposure to Bitcoin, which could lead to a deeper global market for Bitcoin options.

SEC Caps Options Positions at 25,000 Contracts

The SEC’s approval includes strict position and exercise limits, capping positions at 25,000 contracts. This conservative cap, significantly lower than the 250,000-contract limits seen with other ETFs, is designed to reduce the risk of market manipulation and ensure a more controlled trading environment.

Analysts are closely monitoring how the expansion of options trading on spot Bitcoin ETFs will affect Bitcoin’s overall synthetic notional value and its role in the global financial system. Michael explained that in other commodities markets, options’ notional values often surpass the physical supply, which can lead to erratic price behavior. However, he does not expect long-term price distortion in Bitcoin.

As Bitcoin continues its Uptober trend, there’s a record surge in ETF volume. Last week, Bitcoin ETFs saw net inflows of $2 billion—the third-largest in history—with BlackRock’s IBIT ETF leading at $1 billion and Fidelity’s FBTC ETF following with $319 million. Ethereum also gained, with its spot ETF attracting $79 million, according to data from SoSo Value.

You Might Also Like

Bancor Network (BNT) Files Patent Infringement Lawsuit Against Uniswap (UNI)

RLUSD Surges With $100M Issued in Two Days!

Crypto News Today (Sept 22nd, 2024)

The big step before the Fed decision is quite positive for crypto currencies.

Crypto money market will play this quarter big! 4 trillion dollars threshold can be overcome!

TAGGED:CryptoNews
Share This Article
Facebook Twitter Email Print
Previous Article What It Could Mean for Ripple vs SEC
Next Article Gala Team Announces Its Strategy for GalaChain
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Crypto Live Widget

Follow for Live Updates
Subscribe to our newslettern

Get Newest Articles Instantly!

- Advertisement -
Ad imageAd image
Popular News
Cryptocurrency Regulation in Russia : Blockchain Development
Current Cryptocurrency Regulations in India
Explore Cryptocurrency Regulation in South Korea
2 Altcoins Win Trial
Claimed Bitcoin Inventor Craig Wright Gets Shocked in Court! His Assets Are Frozen

Company

  • Vision
  • Mission
  • LitePaper
  • Whitepaper
  • Core Values
  • Branding
  • Teams
  • Career Listing
  • FAQ
  • Welfare Donations

Products

  • EDA Token
  • Blockchain Literature
  • EdaFace Dex
  • EdaFace Mall
  • Listing Platforms
  • Newsfeed
  • NFT Marketplace
  • P2P Market
  • Scam Verification Centre
  • School of Crypto

Legal

  • Term of Use
  • Privacy Policy
  • Disclaimer
  • Listing T&C
  • Listing Platforms
  • Eda Token Policy

Always Stay Up to Date

Subscribe to our newsletter to get our newest articles instantly!

EdaFace

About US

EdaFace is a user interface aggregator that brings all the various functionalities of the crypto industry onto a single platform! You can advertise, launch and crowdfund your crypto project via EdaFace Launchpad and Newsfeed.

Contact us: support@edaface.com

Follow us

Instagram Twitter Facebook Telegram Youtube Linkedin

Copyright © 2022 – 2024. EdaFace is a product of Emerging Digital Age (EDA) Pty Ltd. All Rights Reserved.

Join Us!
Subscribe to our newsletter and never miss our latest news, podcasts etc..

Zero spam, Unsubscribe at any time.
EdaFace
Welcome Back!

Sign in to your account

Lost your password?