A notable development occurred on Friday, highlighting the rapid 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 become slightly larger than 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, surpassing the $26.90 billion in Deribit's bitcoin options, according to data from Volmex. This milestone indicates that the US-based, regulated bitcoin investment and derivatives infrastructure is no longer secondary to the offshore market.
The emergence of a thriving, regulated market in the US could encourage 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 rise as a positive development for the broader crypto derivatives ecosystem. "US retail investors can't easily access platforms like Deribit, so iShares Bitcoin Trust (IBIT) options provide them with direct access to regulated leverage and options exposure.
This is further supported by the current macro environment, with supply chain uncertainty, energy shocks, and broader geopolitical risks driving demand for hedging and options strategies," Fariq explained. Options are derivative contracts that grant the purchaser the right to buy or sell an 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.
Although the two markets now match each other in scale, they are positioned differently, revealing distinct trader sentiment. According to Volmex, the majority of open interest in IBIT call options is concentrated at strike levels equivalent to bitcoin trading around $109,709, roughly 41% above the current price of $77,400. In contrast, positioning in Deribit options is more conservative, with call open interest clustered around levels equivalent to roughly $106,000 in BTC terms.
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. Put positioning is largely aligned across venues, with open interest concentrated around the $63,500 strike.
Notably, IBIT options have expiry dates, with October 2026 expiries being preferred, while August expiries dominate on Deribit. "IBIT options are approximately two months longer-dated on an OI-weighted basis. The gap is roughly symmetric across puts and calls, suggesting it reflects the underlying holder base, with longer-horizon ETF investors onshore versus more tactical positioning offshore," Volmex noted. 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 increased demand for put options.
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 become comfortable trading options via IBIT, it ultimately feeds into the broader ecosystem, and venues like Deribit benefit from increased sophistication and flow," Fariq said.