Spot Bitcoin exchange-traded funds (ETFs) saw a sharp increase in trading activity upon their debut, with $10 billion exchanged in just three days. Regarding the possible addition of options trading for the commodity-based trust shares linked to some of the upcoming Bitcoin ETFs, there is currently a lot of market conjecture.
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Trading Options for Bitcoin ETFs on the Spot
The New York Stock Exchange (NYSE) has filed a 19b-4 application, requesting clearance for the listing and trading of options on Commodity-Based Trust Shares, according to a report made by Bloomberg analyst Henry Jim last Saturday, January 13. This action is consistent with the design of certain newly launched Bitcoin ETFs. If authorised, this proposal might improve NYSE's profits and trading volume while also increasing liquidity for the recently launched Bitcoin ETFs.
Eric Balchunas, senior ETF strategist at Bloomberg, goes on to say that in order to allow options to be listed on spot BTC ETFs, a 19b-4 registration is a necessary step. All three exchanges submitting under 19b-4 are involved in this procedure, and it is anticipated that the earliest clearance will occur in around two months. Furthermore, Balchunas highlights the importance of these filings by drawing a comparison to commodity trusts like $GLD, which went through a same procedure. He believes that because of the inherent volatility, there may be a surge in interest in these ETFs and that options may play a big role in them.
James Seyffart, a strategist at Bloomberg, discusses the consequences of the 19b-4 application. Although the SEC might theoretically hasten the approval process—having set an initial deadline of less than sixty days—Seyffart anticipates delays because of the agency's past practices.
The period of time for approval may be extended; options include a speedier approval process or a wait until late September or early October 2024. The news is being reported against the backdrop of increased curiosity about how the cryptocurrency ecosystem and traditional financial markets interact.
ProShares has filed new documents for leveraged Bitcoin ETFs in addition to trading options for the spot ETFs. Investors will be able to take positions in support of or opposition to the fluctuations in the price of Bitcoin through ProShares ETFs.
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Grayscale Drives Trading Volumes for BTC ETFs
The asset management behemoth Grayscale has been the main force behind the recent amounts of trading in Bitcoin ETFs. James Seyffart said in his most recent update for Tuesday, January 16 that there were net outflows from the Bitcoin ETFs yesterday. He specifically estimated that $594 million would leave $GBTC, for a total outflow of $1.173 billion.
Although certain other Bitcoin ETFs saw inflows, Seyffart is skeptical that these will be enough to counterbalance the significant withdrawal of about $600 million from $GBTC. One area of interest for market watchers is the behavior of fund flows in the Bitcoin ETF market.