Bitcoin ETF Options to Increase Market Exposure but Won’t Cut Volatility: Bitwise

• Bitcoin ETF options are expected to enhance exposure but won’t lower volatility, says Jeff Park of Bitwise Asset Management.
•  The SEC’s approval of options trading for BlackRock’s iShares Bitcoin Trust signals a significant advancement for institutional adoption.
•  Park believes options won’t create “fake supply” but will accelerate Bitcoin’s price discovery, leading to a higher eventual price.

Jeff Park, the head of Alpha Strategies at Bitwise Asset Management, has stated that Bitcoin ETF options are unlikely to curb Bitcoin’s inherent volatility. Despite the SEC’s recent approval for options trading on BlackRock’s iShares Bitcoin Trust, Park emphasizes that investors shouldn’t expect the options to reduce Bitcoin’s price swings.

Bitcoin, unlike traditional fiat currencies, has a fixed supply capped at 21 million coins. This, Park notes, removes the possibility for central banks to intervene and stabilize its price through monetary policy. He believes Bitcoin holders must embrace price volatility as an inevitable aspect of owning the cryptocurrency.

A Major Development for the Crypto Market

On Friday, the Securities and Exchange Commission (SEC) approved the trading of options for BlackRock’s iShares Bitcoin Trust, a move Park describes as monumental for the cryptocurrency market. The ETF has already made waves by breaking records, and the introduction of options is set to significantly enhance Bitcoin’s market exposure.

Park further explained that Bitcoin’s synthetic notional exposure will expand exponentially due to these options. This development allows options traders to amplify their exposure while paying the same premium, providing what Park calls “more bang for their buck.” Additionally, these options will accelerate Bitcoin’s utility within financial markets.

Impact of Options on Volatility

The introduction of Bitcoin ETF options has sparked debate within the crypto community regarding its potential effects on volatility. Park insists that options won’t reduce volatility but rather help accelerate Bitcoin’s path toward its neutral price, which he believes is much higher.

Contrary to concerns that options could create a “fake supply” of Bitcoin, Park argues that these financial products won’t inflate the actual supply. They merely speed up Bitcoin’s price discovery process. 

Institutional Adoption on the Rise

Besides increasing exposure, the approval of Bitcoin ETF options marks a significant step in institutional adoption. Traders now have the opportunity to capture more delta while navigating the complexities of Bitcoin’s price movements. Although volatility remains a concern, the ability to use options for market leverage is expected to attract more institutional investors into the cryptocurrency space.