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Is Bitcoin Set to Drop 30% With The Launch of BTC ETF Options?

Despite concerns over market volatility, the launch of Bitcoin ETF options is seen as a key milestone, with expectations of greater institutional participation.

Avatar image of Jonathan Agozie Jonathan Agozie•November 19, 2024
Bearish

The cryptocurrency community is discussing the possibility of Bitcoin’s price dropping by 30% as the U.S. Options Clearing Corporation (OCC) prepares to allow trading of options for spot Bitcoin ETFs. The concern comes from a similar situation when gold’s price fell sharply after options were introduced for its ETF.

Crypto analyst Ben Lilly highlighted these concerns, referencing gold’s performance and urging Bitcoin not to follow the same trajectory. 

“Bitcoin… Please don’t follow suit,” he tweeted.

IBIT’s Options Set to Launch

While concerns about potential market volatility persist, the introduction of Bitcoin ETF options is regarded as a significant step for cryptocurrency markets, with many anticipating increased institutional participation.

A November 18 notice from the OCC announced its readiness to manage the “clearance, settlement, and risk management” of these ETFs. This follows an advisory from the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission’s (SEC) approval of options on BlackRock’s iShares Bitcoin Trust.

In response to the OCC’s announcement, Alison Hennessy, head of Nasdaq’s exchange-traded product listings, stated that the exchange plans to begin trading spot Bitcoin ETF options on November 19. Specifically, she highlighted BlackRock’s iShares Bitcoin Trust, which has seen significant ETF inflows throughout 2024.

Institutional Demand for IBIT

Since its launch earlier this year, BlackRock’s iShares Bitcoin Trust has established itself as a dominant player in the crypto industry, amassing $43 billion in assets under management (AUM) and holding nearly 472,000 Bitcoins. This highlights the strong institutional demand for the fund.

The iShares Bitcoin Trust achieved over $40 billion in total assets within 211 days, placing it in the top 1% of ETFs by AUM. According to CoinTab, the rapid growth significantly outpaces the previous record of 1,253 days to reach a similar milestone.

Its recent market activity further underscores its influence. On November 13, it set a new record with $5 billion daily trading volume as Bitcoin’s price climbed past $93,000. Earlier, on November 7, the fund recorded its largest daily inflow, purchasing over $1 billion worth of BTC amid a market surge.

Jonathan Agozie

Jonathan Agozie is a prompt engineer committed to crafting clear and technically sound content on blockchain, cryptocurrency, and Web3 technologies.