A significant development occurred on Friday, marking the acceleration of institutional involvement in 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 the offshore platform Deribit. Notably, IBIT options have bridged 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, according to data from Volmex. This milestone signifies that the US-based, regulated bitcoin investment and derivatives infrastructure is no longer secondary to the offshore market. The thriving, regulated market in the US may 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, 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 income on coin or ETF holdings.
The covered call strategy, involving IBIT ETF and IBIT options, is a popular income-generating approach, allowing investors to profit from BTC's implied volatility. The two markets, though similar in scale, differ in positioning, 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's call open interest is 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, 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.
ETF holders tend to have a longer investment horizon, with October 2026 expiries preferred in IBIT, while August expiries dominate on Deribit. Lastly, IBIT's implied volatility is higher than Deribit's, attributed to a structural quirk where ETF holders cannot easily short bitcoin directly, leading to increased demand for put options. The rapid rise of IBIT in the options market is striking, and while it rivals Deribit in scale, the two are not direct substitutes, catering to different investor bases. According to Fariq, this development expands the market, increasing sophistication and flow, ultimately benefiting venues like Deribit.