- SEC raises options position limits for Bitcoin ETFs by 10-fold, boosting BlackRock’s iShares Bitcoin Trust ETF (IBIT)
- The move strengthens IBIT’s market dominance, widening its lead over competitors like Fidelity Wise Origin Bitcoin Fund (FBTC)
- NYDIG’s Greg Cipolaro forecasts reduced volatility and increased demand for spot Bitcoin due to the SEC’s new approval
BlackRock’s market-leading spot Bitcoin exchange-traded fund (ETF), the iShares Bitcoin Trust ETF (IBIT), is set for significant growth after the U.S. Securities and Exchange Commission (SEC) raised the position limits for options contracts. On Tuesday, the SEC increased the allowable options contracts for all ETFs from 25,000 to 250,000, giving IBIT a substantial advantage over its competitors, including the Fidelity Wise Origin Bitcoin Fund (FBTC), which remains a distant second in the market.
BlackRock’s Bitcoin ETF to Lead as SEC Increases Options Contracts Limit
Greg Cipolaro, global head of research at crypto financial services firm NYDIG, noted that this decision could reduce Bitcoin’s volatility and stimulate further demand in the spot market. By allowing more aggressive options strategies, such as covered call selling, the SEC’s action will likely lead to more institutional capital entering the market, drawn by Bitcoin’s now lower-risk appeal for diversified portfolios.
The feedback loop of falling volatility leading to increased spot buying could become a powerful driver of sustained demand, Cipolaro explained.
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SEC approvals to shape market structure and investor access
In addition to raising the options position limits, the SEC also approved in-kind creation and redemption for crypto ETFs, allowing shares to be exchanged for Bitcoin instead of cash. Cipolaro highlighted that this feature was eagerly anticipated by ETF issuers and would have significant impacts on market structure, particularly for financial institutions involved in arbitrage activities. However, not all Authorized Participants (APs) are equipped to manage both sides of the trade, and it’s expected that broker-dealers without crypto capabilities will need to partner or acquire crypto trading capabilities to stay competitive.
