Grayscale Launches Bitcoin ETF Options Following Strong Market Demand

TLDR

• BlackRock’s IBIT Bitcoin ETF options debut achieved record $4.1B trading volume
• Bitcoin reached new all-time high of $94,041 following options launch
• Grayscale announcing options trading for GBTC and BTC starting November 20
• Total spot Bitcoin ETF inflows surged 220% to $816.44M in one day
• ARK’s ARKB led inflows with $267.34M, followed by Fidelity’s FBTC ($256.15M)

The Bitcoin ETF market continues to evolve as Grayscale Investments announces plans to launch options trading for its spot Bitcoin ETFs on Wednesday. This move follows BlackRock’s successful debut in the options market, which saw record-breaking trading volumes and coincided with Bitcoin reaching new price heights.

BlackRock’s iShares Bitcoin Trust (IBIT) set a new benchmark in the industry by recording $4.1 billion in trading volume on its first day of options trading. The launch proved more successful than anticipated, with nearly $1 billion in volume occurring within the first 20 minutes of market opening.

The options trading activity showed a clear bullish sentiment among investors. Data revealed that 354,000 contracts were traded, with 289,000 calls compared to 65,000 puts, creating a 4.4:1 ratio in favor of positive price movement bets.

Eric Balchunas, Bloomberg’s senior ETF analyst, highlighted the unprecedented nature of IBIT’s performance. “For context, BITO did $363 million, and that’s been around for four years,” he noted, referring to ProShares’ futures Bitcoin ETF.

$1.9b is unheard of for Day One. For context, $BITO did $363m and that’s been around for four years. And also this is with 25,000 contract position limits. That said, $1.9b isn’t quite big dog level yet tho, eg $GLD did $5b today, but give it a few more days/weeks. https://t.co/nAr2rracjb

— Eric Balchunas (@EricBalchunas) November 19, 2024

Grayscale’s entry into options trading includes both its GBTC (Grayscale Bitcoin Trust) and BTC (Bitcoin Mini Trust) products. The company filed an updated prospectus for its Bitcoin Covered Call ETF on January 11, following approval from the Options Clearing Corporation (OCC).

The broader market impact has been notable, with total spot Bitcoin ETF inflows increasing by 220% in a single day. On Tuesday, the 12 spot Bitcoin ETFs collectively recorded net inflows of $816.44 million, more than double the previous day’s figures.

ARK and 21Shares’ ARKB led the surge with $267.34 million in new inflows, marking its highest single-day total since launch. Fidelity’s FBTC and BlackRock’s IBIT followed closely, bringing in $256.15 million and $216.12 million respectively.

Smaller players also contributed to the positive momentum. Bitwise’s BITB attracted $52.75 million, while Grayscale’s GBTC and VanEck’s HODL brought in $16.19 million and $7.9 million respectively.

Trading volumes across these ETFs reached $4.78 billion on Tuesday, up from $3.62 billion the previous day. This surge in activity coincided with Bitcoin’s price reaching $94,041, establishing a new all-time high.

Grayscale’s move into options trading comes after its legal victory against the SEC last August. The U.S. Court of Appeals ordered the SEC to reconsider its earlier denial of Grayscale’s application to convert its Bitcoin Trust into a spot ETF, marking a turning point for the industry.

Grayscale is thrilled that Options trading on both $GBTC and $BTC will begin tomorrow – further developing the ecosystem around our US-listed #Bitcoin ETPs. pic.twitter.com/i7kFpOiogq

— Grayscale (@Grayscale) November 19, 2024

The new options offerings aim to generate income through a covered call strategy. This involves writing and buying options contracts on Bitcoin exchange-traded products while maintaining Bitcoin or GBTC as collateral.

Bloomberg ETF analyst Seyffart noted Grayscale’s quick response to market opportunities, tweeting that the asset manager was “wasting no time” in expanding its product offerings.

The total trading volume for Bitcoin ETF options has exceeded expectations, with BlackRock’s IBIT achieving nearly $1.9 billion in notional exposure traded on its first day. This placed IBIT among the top 20 most active non-index options during its opening session.

Market data shows that approximately 73,000 options contracts were traded in the first hour alone, demonstrating strong investor interest in these new financial instruments.

This expansion of Bitcoin ETF options provides investors with additional tools for managing their cryptocurrency exposure. The options allow traders to speculate on price movements and implement various trading strategies.

The covered call strategy employed by Grayscale’s new offering represents a more sophisticated approach to generating income from Bitcoin holdings, potentially attracting investors looking for yield opportunities in the crypto market.

Recent data indicates that the remaining Bitcoin ETFs maintained neutral positions, while some fund data, including flows into Grayscale’s Bitcoin Mini Trust, remained pending at the time of reporting.