A notable development occurred on Friday, marking the accelerated institutionalization of the bitcoin market, which has been driven by individual investors for years. This is due to the growth of options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, which have become slightly larger on Nasdaq 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 dollar value of open IBIT options contracts on Nasdaq reached $27.61 billion, surpassing 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 IBIT options is expected to 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.
The covered call strategy, involving IBIT ETF and IBIT options, is a popular income-generating approach, allowing investors to profit from BTC's implied volatility. The two markets, IBIT and Deribit, now match each other in scale but 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's call open interest is 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 IBIT options expiries preferred in October 2026, while Deribit's expiries are dominated by August. 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 options is striking, and while it rivals Deribit in scale, the two are not direct substitutes, catering to different investor bases. According to Fariq, the growth of IBIT options expands the market, increasing sophistication and flow, and ultimately benefiting venues like Deribit.