A notable development occurred on Friday, indicating the rapid institutionalization of the bitcoin market, which has been driven by individual investors for years. This 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 the offshore platform Deribit.
In just two years, IBIT options have closed the gap with Deribit's bitcoin options market, which has been operating since 2016. On Friday, the dollar value of open IBIT options contracts on Nasdaq, also known as open interest, reached $27.61 billion, slightly higher than the $26.90 billion in Deribit's bitcoin options. This milestone signifies that the regulated, institutional-grade bitcoin investment and derivatives infrastructure in the US is no longer secondary to the offshore market. Furthermore, 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 positive development for the broader crypto derivatives ecosystem. "US retail investors cannot 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, 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 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 simultaneously holding the ETF and shorting IBIT calls at levels above the ETF's current market price. The two markets, though similar in scale, are positioned differently, revealing insights into trader sentiment. 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. Positioning in Deribit options is also concentrated on the higher side but is slightly more conservative.
"Onshore call open interest 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. Put positioning is largely aligned across venues, with open interest concentrated around the $63,500 strike.
ETF holders tend to be more patient, with options having expiry dates that depend on the price of IBIT or spot BTC at the time of settlement. Analysis of activity across both markets suggests that, on average, 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, which Volmex attributes to a structural quirk. All things considered, IBIT's rapid rise in the options market is striking and 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.