Recently, there has been significant focus on the U.S. Securities and Exchange Commission’s (SEC) green light for BlackRock’s proposal to launch and trade options linked to its Bitcoin spot exchange-traded fund (ETF), IBIT.
Granted on September 20th, the SEC expedited the approval process, enabling the world’s largest asset manager to introduce these options.
This permission allowed the options to be exchanged on the Nasdaq ISE, LLC, marking a significant achievement in BlackRock’s Bitcoin-related ventures. This signaled a new phase for cryptocurrency investment choices.
Insights from an Executive
Illustrating why BlackRock’s Bitcoin ETF sets itself apart as the premier selection, Joshua Lim, co-founder of Arbelos Markets, shared his perspectives in a recent X thread.
Lim highlighted several crucial elements that position BlackRock’s BTC ETF as the preferred option in the current market.
He remarked,
“Given that BTC is inherently a digital asset, it is considerably easier to financialize it and transfer it for trade settlements compared to other commodities. IBIT and the other ETFs have enhanced velocity, allowing previously cold-storage-bound BTC to be accessible for liquid trading.”
Elaborating on his stance, Lim stressed that prime brokers extending margin lending in USD against BTC collateral could significantly amplify the cash supply within the crypto market.
This increased liquidity, he speculated, is likely to flow into riskier segments of the ecosystem, with funds shifting from spot Bitcoin ETFs into speculative assets like meme coins and NFTs.
Lim opined that this transition could stimulate additional investments in these alternative assets, reshaping the broader crypto landscape.
He further added,
“Options markets associated with IBIT (and the readiness of market makers to bear risks) will simplify the process of pricing the inherent risks in margin lending against IBIT, making it more probable for prime brokers to lend against cryptocurrencies… thus, there might be a surge in altcoins.”
Implications of the Approval
The inevitable question that arises is: How will this approval impact the trajectory of the world’s leading cryptocurrency?
Addressing this, ETF Store President Nate Geraci stated,
Even prior to the approval, Eric Balchunas, Bloomberg’s senior ETF analyst, foresaw,
In the wake of Blackrock’s significant move, entities like Grayscale and Bitwise have shown interest in listing and trading options for their respective Bitcoin spot ETFs. This development follows the SEC’s approval of 11 Bitcoin spot ETFs in January.
Amid the escalating enthusiasm, Jeff Park, alpha strategies head at Bitwise, provided a distinct viewpoint on the scenario, expressing,
“Things are likely to get chaotic. In such circumstances, regulated markets might close down. However, the unique aspect of Bitcoin is that there will always exist a parallel, decentralized market that cannot be shuttered, in contrast to GME—which, undoubtedly, will further stoke the flames.”