A significant development occurred on Friday, marking the accelerated institutionalization of 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 Deribit, a major offshore platform. 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, slightly exceeding the $26.90 billion in Deribit's bitcoin options, according to data from Volmex.
This milestone indicates 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 the underlying asset at a predetermined price, and analysts use open interest as a measure of market size and participation. Traders utilize options to hedge existing positions, speculate on price direction, and generate income on coin or ETF holdings.
The preferred income-generating strategy involving IBIT ETF and IBIT options is the covered call strategy, allowing investors to profit from BTC's implied volatility. The two markets, though now matching in scale, are positioned differently, 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 positioning in Deribit options is more conservative, with call open interest clustered around $106,000 in BTC terms.
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. The rapid rise of IBIT in the options market is striking, and while it now 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.