A notable development occurred on Friday, indicating the accelerating pace 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 surpassed the total bitcoin options trading on the offshore platform Deribit. In just two years, IBIT options have bridged the gap with Deribit's bitcoin options market, which has been in operation since 2016.
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 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, 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 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 income on coin or ETF holdings. One popular income-generating strategy involving IBIT ETF and IBIT options is the covered call strategy, allowing 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. The two markets, though now matching 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, Deribit options positioning is 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, 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 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, catering to different investor bases and needs.