A notable 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 player. 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 open interest in IBIT options contracts on Nasdaq reached $27.61 billion, slightly higher than Deribit's $26.90 billion, 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, potentially emboldening more Wall Street institutions to explore digital assets and 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, and analysts use open interest to measure market size and participation. The higher the open interest, the deeper and more liquid the 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, which allows investors to profit from BTC's implied volatility.
The two markets, though similar in scale, differ in shape, 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, while Deribit options positioning is more conservative, with call open interest clustered around $106,000.
The onshore call open interest is concentrated 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 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. Overall, IBIT's rapid rise in the options market is striking, and while it may rival Deribit in scale, the two are not direct substitutes, catering to different investor bases.