A notable development occurred on Friday, highlighting the rapid growth of institutional involvement in the bitcoin market, which has long been driven by individual investors. This is evident in the fact that options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, have become more prominent on Nasdaq than the total bitcoin options trading on the offshore platform Deribit. It is particularly striking that IBIT options have managed to close the gap with Deribit's bitcoin options market in just two years, despite Deribit having been in operation 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 regulated, institutional-grade bitcoin investment and derivatives infrastructure in the US is now on par with the offshore market. Furthermore, the growth of a 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 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 is 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.
They can be used to hedge existing positions, speculate on price direction, or generate additional income. One popular 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 each other in scale, are positioned differently, 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, or roughly 41% above the current price.
In contrast, Deribit options positioning is more conservative, with call open interest clustered around levels equivalent to roughly $106,000 in BTC terms. Volmex noted that onshore call open interest is concentrated roughly 4 percentage points further out-of-the-money than offshore, 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. Analysis of activity across both markets suggests that IBIT options have expiry dates that are, on average, two months longer-dated than those on Deribit.
Volmex attributes this to the underlying holder base, with longer-horizon ETF investors onshore versus more tactical positioning offshore. Lastly, IBIT's implied volatility is higher than the implied volatility derived from Deribit's BTC options, due to a structural quirk where ETF holders cannot easily short bitcoin directly and instead buy put options as a hedge. 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.
Fariq emphasized that this development expands the market, ultimately benefiting venues like Deribit as more participants become comfortable trading options via IBIT.