A significant development occurred on Friday, marking a milestone in the 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 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 (OI) of IBIT options contracts on Nasdaq reached $27.61 billion, slightly higher than Deribit's $26.90 billion, according to data from Volmex.
This achievement indicates that the US's regulated, institutional-grade bitcoin investment and derivatives infrastructure is now on par with the offshore market. The rise of a booming, regulated market in the US could encourage more Wall Street institutions to explore digital assets, 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 an underlying asset at a predetermined price.
Analysts use open interest to measure 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, which allows investors to profit from BTC's implied volatility. The two markets, although 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.
In contrast, Deribit options positioning is slightly more conservative, with call open interest clustered around $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. Put positioning is largely aligned across venues, with open interest concentrated around the $63,500 strike.
ETF holders tend to be more patient, with IBIT options expiries preferred in October 2026, whereas Deribit expiries dominate in August. The implied volatility of IBIT is higher than Deribit's, attributed to a structural quirk where ETF holders buy put options as their only available hedge, keeping IBIT's implied volatility slightly elevated. Overall, IBIT's rapid rise in the options market is striking, and while it rivals Deribit in scale, the two are not direct substitutes, catering to different investor bases.
As more participants become comfortable trading options via IBIT, it ultimately expands the market, benefiting venues like Deribit.