A significant development occurred on Friday, marking the accelerated institutionalization of the bitcoin market, which has long been driven by individual investors. This shift is evident in the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have surpassed the total bitcoin options trading on Deribit, a major offshore player.
Notably, IBIT options have closed the gap with Deribit's bitcoin options market in just two years, despite Deribit's six-year head start. 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. This milestone signifies that the US's regulated, institutional-grade bitcoin investment and derivatives infrastructure is now on par with the offshore market.
The rise of a booming, regulated market in the US may embolden more Wall Street institutions to explore digital assets, ultimately leading to more mature price discovery. According to Sidrah Fariq, Deribit's Global Head of Retail Sales and Business, IBIT's growth is a net positive 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 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 additional 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 differ in shape, revealing distinct trader sentiments. 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, 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, ETF holders tend to be more patient, with October 2026 expiries preferred in IBIT, while August expiries dominate on Deribit. IBIT options are approximately two months longer-dated on an OI-weighted basis, reflecting the underlying holder base of 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, 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, now rivaling Deribit in scale, but 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 place for global investors.