IBIT’s Bitcoin ETF Domination: A Wildean Wink?

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Markets

What to know:

  • IBIT now commands a staggering 57.5% of Bitcoin ETF assets under management, which is roughly the same percentage of my patience that I’ve lost to this entire affair. 🎩💰
  • The launch of ETF options back in November 2024 has transformed Bitcoin’s market structure and volatility profile-because nothing says “stability” like a derivative so complex even a philosopher would need a dram of brandy to comprehend it. 🧠🍷
  • Options trading volume runs between $4 and $5 billion per day. Ah, the sweet, sweet sound of money being thrown at paper. 💸

Analyst James Check and Unchained produced a report on the current Bitcoin market landscape, with the most interesting takeaway being the rise of Bitcoin exchange-traded funds (ETFs) specifically the success of iShares Bitcoin Trust (IBIT) and the options market that now underpins the product. How thrilling! One might say it’s the financial equivalent of a well-tailored suit-dramatically dramatic. 👔

The report opens with a quote saying: “Options are now the dominant derivatives instrument by open interest, being over $90 Billion in size, and eclipsing the futures markets at $80 Billion”. A poetic triumph, if ever there was one. 📈

Since its launch in January 2024, IBIT has seen around $61 billion in net inflows over 18 months, making it one of the most successful ETFs of all-time. One might argue it’s less an ETF and more a financial magician-pulling rabbits out of hats, or in this case, money out of thin air. 🎩🐇

However, the dominance accelerated following the launch of ETF options in November 2024. Ah, the magic of options! Because nothing says “I’m a sophisticated investor” like betting on bets. 🎲

The options market, which gives investors the right but not the obligation to buy or sell an asset at a set price within a certain timeframe, has dramatically reshaped flows, with IBIT attracting $32.8 billion in inflows while competitors have remained flat since the options began trading. A tale of two markets: one thriving, the other… politely declining. 🚶‍♂️

The report states that IBIT now controls 57.5% of all Bitcoin ETF assets under management (AUM), up from 49% in October 2024, with roughly 40 cents of options open interest for every dollar of Bitcoin held in the fund. By contrast, Fidelity’s FBTC, the second largest ETF, is about 25 times smaller than IBIT in options open interest, with around $1.3 billion. A David and Goliath story, but with more spreadsheets and fewer slingshots. 🧾

This level of activity has made IBIT a rival to Deribit, the world’s largest crypto options exchanges, where daily trading volumes typically run between $4 billion and $5 billion, according to the report. A duel of titans, but with less swords and more spreadsheets. 📊

The report also points to 13F filings, the quarterly disclosures required by the SEC for investment managers with over $100 million in assets. These filings show institutions holding ETFs, allowing others to use the options market to be able to short or use arbitrage methods for hedging volatility. A game of chess, but with more jargon and fewer pawns. 🏰

Overall, the report concludes that Bitcoin’s volatility profile has shifted meaningfully in this cycle, with ETFs and their options markets serving as a major driver of that change. A revolution in finance, but with less revolution and more spreadsheets. 📈

“In our view, the launch of options on top of the spot ETFs is thus far an under-discussed, but highly important change in Bitcoin’s recent market structure”, the report said. A sentiment as sharp as a well-kept secret and as subtle as a sledgehammer. ⚒️

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2025-09-29 15:38