A notable development occurred on Friday, signaling the accelerating institutionalization of the bitcoin market, which has been driven by individual investors for years. This is because options linked to BlackRock's bitcoin exchange-traded fund (ETF), IBIT, have surpassed total bitcoin options trading on the offshore platform Deribit in terms of open interest. Notably, IBIT options have closed the gap with Deribit's bitcoin options market, which has been operating since 2016, in just two years.
On Friday, the dollar value of open IBIT options contracts on Nasdaq was $27.61 billion, slightly higher than 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. A thriving, regulated market in the US could encourage 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 rise as a positive development for the broader crypto derivatives ecosystem.
"US retail investors can access regulated leverage and options exposure through IBIT options, which is further supported by the current macro environment, including supply chain uncertainty, energy shocks, and geopolitical risks, driving demand for hedging and options strategies," Fariq stated. Options are derivative contracts that give 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 use 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 by 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 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. Positioning in Deribit options is also concentrated on the higher side but is slightly more conservative.
"Onshore call open interest is concentrated roughly 4 percentage points further out-of-the-money than offshore, and the onshore average delta is slightly lower, 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 have a longer investment horizon, with October 2026 expiries preferred in IBIT, while August expiries dominate on Deribit. "IBIT options are approximately two months longer-dated on an OI-weighted basis, reflecting the underlying holder base, with longer-horizon ETF investors onshore versus more tactical positioning offshore," Volmex observed.
Lastly, IBIT's implied volatility is higher than the implied volatility derived from Deribit's BTC options, which Volmex attributes to a structural quirk: ETF holders cannot easily short bitcoin directly, so they buy put options as their only available hedge. This demand for put options is keeping IBIT's implied volatility elevated.
Overall, 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.