A significant development occurred on Friday, marking a major milestone in the institutionalization of the bitcoin market. This is due to the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have become larger than total bitcoin options trading on the offshore platform Deribit. 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, surpassing the $26.90 billion in Deribit's bitcoin options. This achievement 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 can't access platforms like Deribit, so iShares Bitcoin Trust (IBIT) options provide them with direct access to regulated leverage and options exposure. This is further supported by the current macro environment, which drives demand for hedging and options strategies," Fariq stated.
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/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. Positioning in Deribit options is also concentrated on the higher side but is slightly more conservative.
"Onshore call OI is concentrated roughly 4 percentage points further out-of-the-money than offshore, and the onshore average delta is slightly lower. This is consistent with onshore flow being dominated by retail upside speculation and systematic call overwriting programs," Volmex noted. 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 expiring in October 2026 being 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, which Volmex attributes to a structural quirk.
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.