A notable development occurred on Friday, marking the accelerated 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 become slightly larger on Nasdaq than total bitcoin options trading on the offshore platform Deribit. It is striking that IBIT options have closed the gap with Deribit's bitcoin options market in just two years, despite Deribit operating since 2016. On Friday, the dollar value of open IBIT options contracts on Nasdaq was $27.61 billion, surpassing 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 no longer secondary to the offshore market. A thriving, 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 rise as a net positive for the broader crypto derivatives ecosystem. "US retail can't access platforms like Deribit, so iShares Bitcoin Trust (IBIT) options provide them with direct access to regulated leverage and options exposure.
This is 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 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, though matching in scale, are positioned differently, revealing trader sentiment. According to Volmex, the bulk of open interest in IBIT call options points to 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.
Positioning in Deribit options is bullish but measured, suggesting expectations of a rally to $106,000. "Onshore call OI is concentrated roughly 4 percentage points further out-of-the-money than offshore, and the onshore average delta is slightly lower.
This is consistent with onshore flow being dominated by retail upside speculation and systematic call overwriting programs," Volmex noted. Options have expiry dates, and analysis of activity across both markets suggests that October 2026 expiries are 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, attributed to a structural quirk where ETF holders cannot easily short bitcoin directly, leading to demand for put options and elevated implied volatility. Overall, IBIT's rapid rise in the options market is striking and now appears to rival Deribit in scale, although the two are not direct substitutes, as IBIT options cater to regulated, onshore investors, 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.