Nasdaq is seeking regulatory approval to launch and trade options on a Bitcoin index. The exchange operator announced this move on Tuesday, marking a significant step towards expanding trading opportunities for institutional investors interested in Bitcoin.
The U.S. Securities and Exchange Commission (SEC) has not yet approved any options based on individual exchange-traded funds (ETFs) linked to spot Bitcoin prices. This includes a Nasdaq application to trade options on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF. The proposed Nasdaq Bitcoin Index Options would track the CME CF Bitcoin Real-Time Index, which is designed to follow Bitcoin futures and options contracts available on the CME Group’s exchange.
These options would provide a quick and cost-effective way for traders and institutional investors to increase or hedge their exposure to Bitcoin. Matt Hougan, Chief Investment Officer at Bitwise, emphasized the importance of having options available for Bitcoin. “It’s important for options on Bitcoin to be available for this asset class to be fully normalized,” Hougan said, adding that these options would complete the liquidity picture for Bitcoin.
Options are financial derivatives that give the holder the right to buy or sell an asset, like a stock or an ETF, at a predetermined price by a certain date. They are a popular tool for traders to amplify their purchasing power and for institutional investors to manage risk.
While waiting for regulatory approval, traders have been using alternative products, such as recently-launched leveraged ETFs tied to Bitcoin and options on those funds. Exchanges began applying for the spot Bitcoin ETF options soon after it was clear that the SEC would approve the underlying ETFs in January. However, due to SEC comments, some applications have been withdrawn and refiled in recent weeks.
This development reflects the growing interest in Bitcoin and the ongoing efforts to offer more sophisticated trading tools for investors in the cryptocurrency market.
