A significant development occurred on Friday, marking the accelerated institutionalization of the bitcoin market, which has long been driven by individual investors. This is evident in the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have gained traction on Nasdaq, surpassing the total bitcoin options trading on 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 signifies that the regulated, institutional-grade bitcoin investment and derivatives infrastructure in the US is now on par with the offshore market. The rise of a booming, regulated market in the US could embolden more Wall Street institutions to explore digital assets, ultimately leading to more mature price discovery.
Sidrah Fariq, Deribit's Global Head of Retail Sales and Business, views IBIT's growth as a positive development for the broader crypto derivatives ecosystem. 'US retail investors can access regulated leverage and options exposure through IBIT options, which is further driven by the current macro environment of supply chain uncertainty, energy shocks, and geopolitical risks, naturally increasing demand for hedging and options strategies,' Fariq explained. Options are derivative contracts that grant the purchaser the right to buy or sell the underlying asset at a predetermined price at a later date. Analysts use open interest as a measure of market size and participation, with higher open interest indicating a deeper and more liquid market.
Traders utilize 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 by holding the ETF and shorting IBIT calls at levels above the ETF's current market price. The two markets, although now matching in scale, differ in positioning, revealing distinct trader sentiment. According to Volmex, the majority 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, roughly 41% higher than the current market price.
In contrast, Deribit options positioning is bullish but more measured, indicating expectations of a rally to $106,000. 'Onshore call open interest is concentrated roughly 4 percentage points further out-of-the-money than offshore, and the onshore average delta is slightly lower, consistent with onshore flow being dominated by retail upside speculation and systematic call overwriting programs,' Volmex noted. ETF holders tend to be more patient, with options expiring in October 2026 being preferred in IBIT, while August expiries dominate on Deribit.
'IBIT options are approximately two months longer-dated on an open interest-weighted basis, suggesting it reflects the underlying holder base, with longer-horizon ETF investors onshore versus more tactical positioning offshore,' Volmex observed. Lastly, IBIT's implied volatility is higher than the implied volatility derived from Deribit's BTC options, which Volmex attributes to a structural quirk where ETF holders cannot easily short bitcoin directly, leading to increased demand for put options and elevated implied volatility. Overall, IBIT's rapid rise in the options market is striking, and while it now rivals Deribit in scale, the two are not direct substitutes, as IBIT options primarily cater to regulated, onshore investors, while Deribit remains the go-to platform for global investors. 'I don't see this as competition; it expands the market.
As more participants become comfortable trading options via IBIT, it ultimately benefits the broader ecosystem, and venues like Deribit will benefit from increased sophistication and flow,' Fariq said.