Nasdaq seeks SEC nod to lift IBIT options cap to one million contracts

Key Takeaways

What does Nasdaq’s IBIT options expansion mean for Bitcoin?

IBIT options expansion provides 40× more room for Bitcoin derivatives exposure, boosting liquidity, but persistent market fear raises questions.

How is BTC responding to the derivatives surge?

BTC is showing a V-shaped recovery, reclaiming $92k, but full reversal is still uncertain as options leverage peaks and resistance levels loom.

The Q4 market cycle is prompting investors to reconsider the “store of value” narrative.

From DATs losing purchasing power to ETFs bleeding cash, and big institutions selling to protect their balance sheets, Bitcoin [BTC] conviction is being tested. BlackRock’s BTC holdings are a clear example.

According to BitBo, the firm has offloaded roughly 30,000 BTC since the October crash. And it’s not just their direct holdings. BlackRock’s BTC ETF (IBIT) logged more than $3 billion in outflows in November alone.

Source: BitBo

In short, institutional conviction in BlackRock took a hit this cycle.

Yet, the latest Nasdaq–SEC filing looks like an attempt to reboot momentum around IBIT. According to the filing, Nasdaq wants to raise IBIT’s options contract limit from 25k to 1 million, marking a 400% jump.

Simply put, that’s 40× more room for derivatives exposure in Bitcoin, putting IBIT in the same conversation as the “Magnificent Seven” in terms of options depth. But the question is: Is the timing right?

BTC has bounced back to $90k, yet “fear” still dominates the market. ETFs haven’t fully rebounded either. In this context, does Nasdaq’s move give IBIT room for serious derivatives flows, or is it just another high-risk trade?

IBIT expansion drives Bitcoin activity, but volatility looms

The market reaction to the news is clear on the charts. 

According to CoinGlass, Bitcoin’s Options Open Interest (OI) jumped about $4 billion in a single day, hitting $62 billion. That’s a clear sign derivatives activity is picking up, likely boosted by the expanded IBIT options limits.

The impact on Bitcoin? Pretty clear. BTC is riding the bullish momentum from yesterday’s 3.51% rally, trying to reclaim the $92k level.

In fact, this marks BTC’s first V-shaped recovery in nearly a month. 

Source : TradingView (BTC/USDT)

However, a full reversal isn’t on the cards yet. 

In early November, BTC failed to break the $110k ceiling, forming two lower lows, the latest around $80k. In this context, breaking $94k would be the first step toward a vertical expansion.

Meanwhile, options leverage is heating up, while the SEC has yet to rule on the IBIT filing. Still, the market’s reaction is already evident. As BTC nears resistance, how this leverage plays out will serve as a crucial gauge for traders.

If BTC holds above current levels, the 1 million contract expansion could pave the way for deeper liquidity. Otherwise, excessive leverage could make BTC prone to volatility, turning the expansion into a high-risk trade.