CBOE And NYSE Spot Bitcoin ETF Applications Finally Approved By The SEC

On October 18th, 2024, the United States Securities and Exchange Commission (SEC) granted approval for applications by the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list the highly anticipated options for spot Bitcoin exchange-traded funds (ETFs).

Tom Dunleavy, managing partner of investment firm MV Global, noted that the addition of options may help reduce the infamous high volatility and unpredictable nature of Bitcoin and stabilize the markets over time.

A Historic Victory

Options trading will now be accessible for 11 approved ETF providers on the NYSE, which include the Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, VanEck Bitcoin Trust, the WisdomTree Bitcoin Fund, the Grayscale Bitcoin Trust and Bitcoin Mini Trust, Bitwise Bitcoin ETF, the BlackRock iShares Bitcoin Trust ETF, and the Valkyrie Bitcoin Fund.

In addition, the CBOE submitted an application in August 2024 to list options for spot Bitcoin ETF providers through a proposed rule change. This regulatory shift places Bitcoin ETF options alongside other commodity-based ETFs, which the SEC has already permitted for listing on the CBOE, excluding the aforementioned Grayscale Bitcoin Mini Trust.

Previously, several cryptocurrencies experienced positive price movements following the U.S. Securities and Exchange Commission approving several spot Ethereum ETFs.

Enhancing Liquidity

Many investors anticipate that the launch of options for Bitcoin ETFs will enhance liquidity in the Bitcoin markets, potentially serving as a catalyst for price increases. Jeff Park, an executive at Bitwise, emphasized that the approval signifies a significant improvement over LedgerX and Deribit, which do not have central guarantors.

He also pointed out that the introduction of options might lead to scenarios where overleveraged short traders could face short squeezes, compelling them to purchase Bitcoin to cover their positions. Park illustrated this by claiming that a trillion-dollar asset cannot be short-squeezed is like saying an elephant cannot dance. While it is large, if enough ropes are tied to its legs and pulled hard enough, even the biggest creature can be moved in unexpected ways.