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The Securities and Exchange Commission (SEC) has approved NYSE American LLC and CBOE to list options on the Spot Bitcoin Exchange Traded Fund (ETF), marking a significant development in the history of cryptocurrencies. The approval paves the way for institutional investors, or “big fish,” to gain greater access to Bitcoin through more traditional financial products.
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NYSE American LLC (ICE-0.37%), a subsidiary of the New York Stock Exchange (NYSE) Group, facilitates trading in a variety of financial instruments, including stocks, options, and exchange traded products (ETPs). Meanwhile, CBOE, formerly known as the Chicago Options Exchange, has established itself as one of the largest and most influential options exchanges in the world.
The NYSE will list and list options on the Grayscale Bitcoin Trust (GBTC-2.52%) (GBTC), the Grayscale Bitcoin Mini Trust (BTC), and the Bitwise Bitcoin ETF (BITB), according to two statements from the SEC. allowed to trade. Meanwhile, Cboe Global Markets has received approval to list and trade options on Fidelity Wise Origin Bitcoin Fund (FBTC) and ARK 21Shares Bitcoin ETF (ARKB).
What is options trading?
Options trading involves speculating on the value of an asset by buying and selling option contracts. An option is a type of financial contract that gives the buyer the right to buy (call option) or sell (put option) an asset at a predetermined price (strike price) by a specific date (expiration date). date). To obtain this right, the buyer pays a premium to the seller.
Why is spot Bitcoin ETF options trading important?
Approval of Spot Bitcoin ETF option trading will provide institutional investors and traders with an alternative means of hedging their exposure to Bitcoin – in this case, the Bitcoin ETF will be able to trade options in a predetermined amount within a certain period of time. will be traded at the given price.
Many in the financial community hope that allowing the option of Bitcoin ETFs will attract more institutional investors to the crypto market while increasing liquidity and making Bitcoin more mainstream in financial markets. .
In the SEC’s approval of the NYSE, the SEC emphasized that Bitcoin ETF options support hedging strategies, facilitate increased liquidity, and improve price accuracy while reducing volatility of the underlying asset. Additionally, the SEC believes this will lead to increased market transparency and efficiency for Bitcoin ETFs and related products.
Spot Bitcoin ETF records best performance in history
More than 5,000 ETFs have been launched in various sectors over the past 30 years, and the Bitcoin ETF has outperformed them all, including the hugely successful gold ETF. Since the U.S. Bitcoin ETF debut in January 2024, total net flows have exceeded $21 billion, a remarkable achievement considering the typical challenges faced by new ETFs.
Netflow is the “toughest metric to grow” for ETFs, highlighting the rapid and widespread adoption of Bitcoin funds, according to Eric Balchunas, senior ETF analyst at Bloomberg. By comparison, gold ETFs took about five years to reach similar levels of net inflows.
The addition of spot Bitcoin ETF option trading will further increase the applicability of Bitcoin among investors.
