A notable development occurred on Friday, indicating the acceleration of institutional investment in the bitcoin market, which has long been driven by individual investors. This is evident in the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have now 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 in operation 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, 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 a booming, regulated market in the US could embolden 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.
'US retail cannot access platforms like Deribit, so iShares Bitcoin Trust (IBIT) options provide them with direct access to regulated leverage and options exposure,' Fariq said. 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 use 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 distinct 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. In contrast, positioning in Deribit options is slightly more conservative, with call open interest clustered around levels equivalent to roughly $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 suggests that onshore flow is 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 options having expiry dates that determine when contracts are settled. Analysis of activity across both markets indicates that October 2026 expiries are 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 and longer-horizon ETF investors onshore.
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 and instead buy put options as a hedge. This demand for put options keeps IBIT's implied volatility slightly elevated. 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.
'I don't see this as competition. If anything, it expands the market.
As more participants get comfortable trading options via IBIT, it ultimately feeds into the broader ecosystem, and venues like Deribit benefit from increased sophistication and flow,' Fariq said.