Options on Bitcoin (BTC) ETFs will finally go live in the US by early 2025, according to Bloomberg Intelligence analyst James Seyffart.
Options on Bitcoin (BTC) ETFs will finally go live in the US by early 2025, according to Bloomberg Intelligence analyst James Seyffart.
Speaking at the Permissionless conference on October 9, Seyffart said that while an introduction before year's end is not impossible, the first quarter of 2025 is closer to a realistic timeline for the launch of these sophisticated financial instruments.
It's worth noting that the way has been partially blazed for options on Bitcoin ETFs, as the SEC allowed Nasdaq to list options tied to BlackRock's iShares Bitcoin Trust, IBIT, back in September.
Final approvals from the Commodity Futures Trading Commission (CFTC) and the Options Clearing Corporation (OCC) remain outstanding. "Unlike the SEC," Seyffart noted, "the CFTC and OCC don’t have strict deadlines,” which is a way of saying it could theoretically take longer.
Through an options contract, investors have the right to sell or buy an underlying asset at a particular price. Bitcoin ETF options were among the first regulated U.S. exchange-listed cryptocurrency options.
Their introduction was considered more important because of the OCC's objective: to mitigate counterparty risk in markets.
These instruments are far from irrelevant outside the universe of cryptocurrencies. Financial advisers responsible for as many as half the investment flows into the $9 trillion ETF market often use options trading to hedge market volatility.
According to a survey by The Journal of Financial Planning, as of 2023 over 10% of the advisers actively employed options in the management of client portfolios.
Seyffart followed up, saying the availability might have a much bigger implication for mainstream market adoption: "Writing options on ETFs could help advisers get more comfortable with the space." He added that volatility, and especially downward price movements, continues to be the biggest deterrent for many potential institutional Bitcoin investors, and options are one of the best ways to manage those risks.
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