Catenaa, Friday, August 08, 2025- BlackRock’s leading spot Bitcoin ETF could expand its market dominance after the US SEC approved higher options contract limits for Bitcoin exchange-traded funds.
Crypto financial services firm NYDIG said the SEC’s decision enhances trading flexibility and may drive further institutional interest toward BlackRock’s Bitcoin ETF products.
On Tuesday, the SEC raised the allowable number of options contracts from 25,000 to 250,000 for all ETFs offering options, including BlackRock’s iShares Bitcoin Trust ETF (IBIT).
The change does not apply to the Fidelity Wise Origin Bitcoin Fund (FBTC), NYDIG’s global head of research Greg Cipolaro said Friday.
“The adjustment will likely extend the already significant lead IBIT holds while limiting FBTC’s position as the second-largest options player,” Cipolaro noted. IBIT manages $85.5 billion, roughly four times FBTC’s $21.35 billion, according to CoinGlass data.
The increased options capacity could help reduce Bitcoin’s price volatility and boost spot demand by enabling strategies like covered call selling, Cipolaro explained.
This approach involves selling call options on assets already owned, limiting downside risk but capping gains.
Reduced volatility may make Bitcoin more attractive to institutional investors seeking balanced risk exposure, potentially fueling sustained demand through a feedback loop of lower volatility and increased buying.
Additionally, the SEC approved in-kind creation and redemption for crypto ETFs, allowing share exchanges for underlying crypto instead of cash. Cipolaro described this as a key feature desired by ETF issuers that could reshape market structure and improve investor access.
Only a few authorized participants possess crypto trading capabilities, including Jane Street and Virtu, with others expected to form partnerships or acquisitions to remain competitive.
