A significant development occurred on Friday, marking the accelerating 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 Deribit, a major offshore platform. 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, exceeding the $26.90 billion in Deribit's bitcoin options, according to data from Volmex. This milestone signifies that the regulated, institutional-grade bitcoin investment and derivatives infrastructure in the US is now on par with the offshore market.
The rise of IBIT options is expected to encourage more Wall Street institutions to explore digital assets, 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 on 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, although matching 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, while Deribit options are more conservative, with call open interest clustered around $106,000. The 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. Put positioning is largely aligned across venues, with open interest concentrated around the $63,500 strike. ETF holders tend to be more patient, with IBIT options expiries preferred in October 2026, while Deribit dominates in August.
The implied volatility of IBIT options is higher than that of 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 its differences with Deribit highlight the distinct needs of regulated, onshore investors and global investors.