- The numbers are 'a ton' for day one, said ETF analyst Eric Balchunas
- Most of the contracts are calls, or investors betting price will increase
- A top contract is betting that Bitcoin’s price will double by December 20
Exposure to Bitcoin? Investors can’t get enough of it.
BlackRock’s latest product, Bitcoin ETF options, drew more than $445 million in their debut on Tuesday. Most of the money went long on the top cryptocurrency.
“A few hundred million so far in options volume on IBIT (a ton for Day One),” wrote ETF analyst Eric Balchunas, who added that contracts are almost all calls.
“Seems very bullish, especially the December 20 contract, which is basically betting the price of btc will double in the next month.”
‘TLDR; the market is bullish that bitcoin’s price ends the year well over $100k.’
— Joe Constori, Theya
Buying calls is bullish because the buyer only profits if the price goes up.
Joe Constori, head of growth at Theya and institutional lead at the Bitcoin Layer agreed. The December 20th, 2024 expiry is seeing its highest volume at the $65 mark, Consorti said on X.
That level translates to a Bitcoin price tag of roughly $114,000.
“TLDR; the market is bullish that bitcoin’s price ends the year well over $100k,” he said.
‘Really impactful’
According to Alex Thorn, head of research at Galaxy Digital, options are going to have a significant effect on the crypto market.
“All other markets – commodities, equities – the derivatives markets are orders of magnitude larger than spot markets,” Thorn said today in an interview on Bloomberg Television.
“You can imagine if we get into a bull market, those options could be really impactful.”
In financial markets, options are a derivative that lets investors buy or sell an underlying asset at predetermined cost for a predetermined period.
They’re useful because they let traders hedge their positions on other assets, such as the spot Bitcoin ETFs.
Larger positions
However, until today most investors in the US could only access Bitcoin options on the CME exchange, thus limiting their liquidity.
Thorn said that options will offer institutions the opportunity to open even larger positions.
“It’s an enormously larger amount of liquidity in the overall space and that just raises the profile of the capital that can invest in the space,” he said.
Pedro Solimano is a Markets correspondent for DL News based in Buenos Aires. Contact the author at psolimano@dlnews.com.