Bitcoin ETF Options Can Trigger Super Cycle, Bitwise Executive Explains

Highlights

Bitwise’s Jeff Park warns that options on Bitcoin ETFs could increase volatility leading to a Bitcoin super cycle.
Jeff Park emphasized the potential of cross-collateralization, allowing non-crypto assets like GLD ETFs to serve as collateral in Bitcoin options.
Bitcoin options trading has grown significantly in 2024, with monthly volumes ranging from $42 billion to $71 billion.

Last month, the U.S. Securities and Exchange Commission (SEC) gave the nod for trading options on BlackRock Bitcoin ETF. However, in his recent interview, Bitwise Head of Alpha Strategies Jeff Park said that options on the BTC ETFs could trigger heightened volatility and thus a Bitcoin super cycle.

Bitcoin ETF Options Can Bring Heightened Volatility

The launch of spot Bitcoin ETFs has been highly successful as the instrument netter nearly $60 billion in AUM just within the first nine months of launch. This puts the BTC ETFs among the most successful ETF launches on Wall Street.

The approval of the options for the spot Bitcoin ETFs would bring volatility down in what many people believed. However, Jeff Park bursts the common notion stating that it could rather lead to an instant super cycle for Bitcoin moving ahead.

During his recent interview with Anthony Pompliano, Jeff Park highlighted the potential of cross-collateralization in the crypto space. The Bitwise executive emphasized the significance of incorporating non-correlated assets, such as GLD ETFs or gold assets, into collateral pools for Bitcoin options. This cross-collateralization could create a more efficient margin framework that allows assets outside of crypto to be used as collateral in regulated environments.

As per the Bitwise executive, this shift would unlock new opportunities for margin systems. He also addressed the directional impact of Bitcoin options trading, suggesting that these instruments could amplify market movements, both upward and downward. Park added that the long-term effect will depend on how the options market evolves.

Here is the INSANE Bitcoin Options Super Cycle Theory.

Bitwise's Jeff Park (@dgt10011) explains why the new ETF options could lead to significant volatility.

We recorded this conversation because I believed the opposite. Watch to see if I change my mind 🙂

0:00 – Intro
1:19… pic.twitter.com/tMBD3zDWWm

— Anthony Pompliano 🌪 (@APompliano) October 7, 2024

On Monday, October 7, the inflows into spot Bitcoin ETFs surged to $235 million with Fidelity FBTC leading with $103.7 million inflows followed by BlackRock’s IBIT at $97 million inflows. The approval of options for BlackRock Bitcoin ETF IBIT can make the instrument more attractive moving ahead.

Recent reports also suggest that the total BTC holdings by BTC ETF are likely to surge past Satoshi Nakamoto’s BTC holdings. An HBO documentary releasing today will unveil who’s the Bitcoin creator with Len Sassaman leading the prediction polls.

Demand for Bitcoin Options on the Rise

In its latest report, 10x Research noted that big players in the Bitcoin ecosystem are strategically engineering leverage to capitalize on the market upside. Besides, the report highlights a growing trend where leverage, through instruments like Bitcoin options, mining companies’ shares, and firms such as MicroStrategy, is being used to pursue substantial gains.

This year in 2024, Bitcoin options trading has seen monthly volumes fluctuate between $42 billion and $71 billion. With traders increasingly using options for leverage and strategic positioning, the role of these financial tools will grow further, thereby influencing the Bitcoin market dynamics in the coming months.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets.   He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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