- Analysts agree that US BTC options could inject more liquidity into the BTC market.
- However, opinions were divided about the long-term volatility and price impact.
Market commentary piled on as regulators approved more US spot. Bitcoin (BTC) ETF Options.
On October 18, the U.S. Securities and Exchange Commission (SEC) approved the product. New York Stock Exchange (New York Stock Exchange) and cboe (Chicago Board Options Exchange).
NYSE American has been approved to offer options on Fidelity’s BTC fund, FBTC, and ARK 21Shares’ ARKB. Meanwhile, Cboe will trade Grayscale’s GBTC, mini BTC, and Bitwise’s BTIB.
This approval follows BlackRock’s recent approval of the IBIT option.
So what is the potential impact on the BTC market and price?
Mixed views on US BTC ETF options
According to some analysts, this could set the pace for further volatility and more liquidity in Bitcoin.
For context, options allow professional traders to speculate and use risk management (hedging) strategies without owning the underlying BTC asset.
After IBIT option approval last month, BTC investor Anthony Pompiliano stated It will reduce BTC volatility and limit its upside potential.
“Blackrock’s approval of options on its Bitcoin ETF will drive greater institutional adoption of the asset, lowering volatility and limiting Bitcoin’s explosive rise.”
However, Bitwise’s Jeff Park copy Net positive approval for BTC volatility, liquidity and price. He refuted misconceptions about US BTC ETF options.
Source: X
Most analysts who shared The Block’s views shared Park’s sentiments.
Ed Tolson, CEO of Kbit, said:
“Institutional market makers who are expected to take the other side of these trades are likely to take gamma sell positions. This means that you have to buy when prices rise and sell when prices fall, potentially amplifying volatility.”
However, Michael Harvey, head of franchise trading at Galaxy Digital, said that while he expected volatility to spike in the short term, this could lessen in the longer term.
“We expect volatility to increase initially as there will be more retail traders than institutions. “Over time, the overall volatility we see today could weaken as institutions adopt yield-generating strategies such as volatility selling.”
Harvey’s outlook on volatility mirrored Pompiliano’s.
In conclusion, analysts are confident that this approval will inject more liquidity into the BTC market.
However, there were mixed views on the volatility and price impact in the short and long term.