A significant development occurred on Friday, marking a milestone in the 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 than 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, surpassing the $26.90 billion in Deribit's bitcoin options, according to data from Volmex. This achievement indicates that the US-based, regulated bitcoin investment and derivatives infrastructure is no longer secondary to the offshore market.
The rise 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. 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, providing US retail investors with direct access to regulated leverage and options exposure. Options are derivative contracts that grant the purchaser the right to buy or sell an 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 utilize options to hedge existing positions, speculate on price direction, and generate income from coin or ETF holdings. One popular income-generating strategy involves the covered call strategy, which allows investors to profit from BTC's implied volatility by holding the ETF and shorting IBIT calls.
The two markets, though similar in scale, differ in shape, revealing distinct trader sentiments. According to Volmex, the bulk of open interest in IBIT call options is concentrated at strike levels equivalent to bitcoin trading around $109,709. In contrast, Deribit options positioning is more conservative, with call open interest clustered around $106,000 in BTC terms.
The onshore call open interest is concentrated roughly 4 percentage points further out-of-the-money than offshore, with the onshore average delta being slightly lower. This is 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. ETF holders tend to be more patient, with October 2026 expiries preferred in IBIT, while August expiries dominate on Deribit.
The implied volatility of IBIT is higher than that of 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. 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, while Deribit remains the go-to platform for global investors.
According to Fariq, this development expands the market, increasing sophistication and flow, and ultimately benefiting venues like Deribit.