A significant development occurred on Friday, highlighting the rapid institutionalization of the bitcoin market, which has been driven by individual investors for years. This is due to the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have surpassed the total bitcoin options trading on the offshore platform Deribit.
Notably, IBIT options have closed the gap with Deribit's bitcoin options market in just two years, despite Deribit's head start since 2016. On Friday, the open interest in IBIT options contracts on Nasdaq reached $27.61 billion, slightly exceeding the $26.90 billion in Deribit's bitcoin options, according to data from Volmex.
This milestone indicates that the US's regulated, institutional-grade bitcoin investment and derivatives infrastructure is no longer secondary to the offshore market. The rise of a booming, regulated market in the US could encourage more Wall Street institutions to explore digital assets, ultimately leading to more mature price discovery. Deribit's Global Head of Retail Sales and Business, Sidrah Fariq, views IBIT's growth as a positive development for the broader crypto derivatives ecosystem. 'US retail investors cannot easily access platforms like Deribit, so IBIT options provide them with direct access to regulated leverage and options exposure.
This is further supported by the current macro environment, which drives demand for hedging and options strategies,' Fariq stated. Options are derivative contracts that grant the purchaser the right to buy or sell the underlying asset at a predetermined price. Analysts use open interest to measure market size and participation, with higher open interest indicating a deeper and more liquid market. Traders use options to hedge existing positions, speculate on price direction, and generate income on coin or ETF holdings.
One popular income-generating strategy involving IBIT ETF and IBIT options is the covered call strategy, which allows investors to profit from BTC's implied volatility. The two markets, although now matched in scale, are positioned differently, revealing distinct trader sentiment. According to Volmex, the bulk of open interest in IBIT call options suggests expectations of an ETF rally to levels equivalent to BTC trading at $109,709 in the near term.
In contrast, positioning in Deribit options is bullish but more measured, indicating expectations of a rally to $106,000. The average delta of onshore call options is slightly lower, consistent with onshore flow being dominated by retail upside speculation and systematic call overwriting programs. ETF holders tend to be more patient, with options expiring in October 2026 being preferred in IBIT, while August expiries dominate on Deribit. Lastly, IBIT's implied volatility is higher than the implied volatility derived from Deribit's BTC options, which Volmex attributes to a structural quirk.
The demand for put options is keeping IBIT's implied volatility slightly elevated. Overall, IBIT's rapid rise in the options market is striking, and it now appears to rival Deribit in scale.
However, the two are not direct substitutes, as IBIT options primarily cater to regulated, onshore investors accessing bitcoin exposure through traditional brokerage channels, while Deribit remains the go-to platform for global investors. 'I don't see this as competition.
If anything, it expands the market. 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,' Fariq said.