Analysis: Bitcoin ETF options approval will increase market volatility in the short term

Odaily News The U.S. SEC approved options trading for multiple Bitcoin spot ETFs, and analysts expect this to increase Bitcoin's market volatility. Kbit CEO Ed Tolson believes that retail investors will use Bitcoin ETF options for speculation, which may amplify price fluctuations. "Retail speculation is likely to be the main use case for BlackRock's IBIT options, and institutional market makers are expected to be the other party to these transactions. This means that they need to buy when prices rise and sell when prices fall, which may increase volatility." Galaxy Digital Franchise Trading Director Michael Harvey also expects volatility to increase in the short term. "We expect the number of retail traders to initially exceed that of institutions, which may increase volatility. Over time, as institutions adopt income-generating strategies, such as selling volatility, this may suppress the overall volatility we see today." (The Block) Yesterday, the U.S. Securities and Exchange Commission (SEC) approved Cboe Exchange and NYSE American Exchange to list multiple Bitcoin ETF options products. Cboe was approved to list options for Fidelity Wise Origin Bitcoin Fund (FBTC) and ARK 21Shares Bitcoin ETF (ARKB); NYSE American was approved to list options for Grayscale Bitcoin Trust ETF (GBTC), Grayscale Bitcoin Mini Trust (BTC) and Bitwise Bitcoin ETF (BITB). According to the documents, both exchanges set the upper limit of unilateral positions for each Bitcoin ETF option at 25,000 contracts, which is lower than other ETF option products.