Bitcoin ETF Options Are Expected To Launch Before 2025

Bitcoin ETF options are expected to begin trading in the United States before 2025. After several months of stagnation, applications to list options on spot BTC exchange traded funds (ETFs) are finally receiving attention from regulators. 

Source: www.aydinlik.com.tr

Bitcoin ETF options are anticipated to start trading on U.S. exchanges this year, with options on Ethereum ETFs expected to follow soon. Options are contracts that provide the right to buy or sell an underlying asset at a specified price known as call or put options in trading terms. They are valuable for hedging and are also popular among speculators.

While adding options trading might seem anticlimactic following the long awaited launch of BTC ETFs in January, it's far from insignificant. Options are essential for institutional adoption, particularly with the high volatility of crypto ETFs. Furthermore, if current crypto options are any indication, spot BTC ETF options are poised to become a significant market.

Regulators Are Beginning To Show More Interest In Bitcoin ETF Options

In January, the three U.S. equities exchanges that list spot Bitcoin ETFs submitted requests to the Securities and Exchange Commission (SEC) to also list options on these funds. The SEC responded with silence, and feedback from external sources was not encouraging. In May, Better Markets Inc., a private industry watchdog, advised the SEC to proceed with extreme caution, citing concerns that marketing such options to retail investors could lead to significant harm, similar to the GameStop meme stock frenzy of 2021. 

The SEC seemed to heed these warnings, requesting additional time to make a decision in March, April, and again in July. However, progress is now being made. On August 8, Cboe submitted an amended application to the SEC, nearly three times longer than the original, with more detailed discussions on market manipulation and position limits. There’s definitely some movement on Bitcoin ETF options, Bloomberg Intelligence analyst James Seyffart noted in a post on X. The SEC likely provided some feedback.

Bloomberg forecasts that spot Bitcoin options will launch in the fourth quarter of this year. Given the pressures of an election year, it is likely they will be approved before November. Spot Ethereum ETFs are expected to follow soon after. On August 6, Nasdaq filed a request with the SEC to list options on BlackRock’s iShares Ethereum Trust (ETHA).

Establishing A New Market

Meanwhile, U.S. investors are free to trade options on a less favorable category of Bitcoin ETFs that use futures to mimic BTC’s price performance. Futures ETFs typically lag behind their spot market counterparts due to the costs associated with rolling over monthly futures contracts, which can diminish overall returns. According to crypto researcher K33 Research, the leading Bitcoin futures ETF, Bitcoin Strategy ETF (BITO), underperformed spot Bitcoin by approximately 2.6% from January to May.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.