SEC Approves Bitcoin ETF Options, Traders Anticipate Boost in Market Liquidity
On October 18, the U.S. Securities and Exchange Commission (SEC) approved applications from the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list long-awaited options for spot Bitcoin exchange-traded funds (ETFs). This move is expected to inject much-needed liquidity into the Bitcoin market, a development traders believe could drive significant price action.
The approval allows options trading for 11 Bitcoin ETF providers listed on the NYSE, including major funds such as Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, and BlackRock’s iShares Bitcoin Trust ETF. The CBOE also secured approval to list options for Bitcoin ETFs after filing a proposed rule change in August 2024, aligning Bitcoin ETF options with other commodity-based ETFs.
Market participants, including Jeff Park, an executive at Bitwise, see this as a major upgrade over existing platforms like LedgerX and Deribit, which lack central guarantors. Park suggested that the new options could lead to ”short squeezes,” where overleveraged traders are forced to buy Bitcoin to cover their positions, potentially driving prices higher.
Tom Dunleavy, managing partner at MV Global, noted that the introduction of Bitcoin ETF options could help stabilize the notoriously volatile cryptocurrency market, smoothing out price fluctuations over time.
The SEC’s approval marks a significant step in mainstreaming Bitcoin as a tradable asset, offering new tools for both institutional and retail investors while enhancing liquidity and potentially reducing volatility in the market.
Featured image from: cointelegraph.com