Bitcoin News Today: SEC raises Bitcoin ETF options limits to 250000 boosting BlackRock's edge over Fidelity

The U.S. Securities and Exchange Commission (SEC) has significantly increased options position limits for Bitcoin exchange-traded funds (ETFs), potentially giving BlackRock’s iShares Bitcoin Trust ETF (IBIT) a stronger lead in the market [1]. The move, announced on Tuesday, raised the allowed number of options contracts from 25,000 to 250,000 for all ETFs with options, including IBIT but excluding Fidelity’s FBTC [1]. Greg Cipolaro, global head of research at NYDIG, highlighted that this regulatory shift is likely to widen the existing gap between the largest and second-largest Bitcoin ETFs, with IBIT managing $85.5 billion in assets, compared to $21.35 billion in FBTC [1].

The increased options limits could also reduce Bitcoin’s volatility by enabling more sophisticated trading strategies, such as covered call selling, where traders sell call options while holding the underlying asset [1]. Cipolaro noted that this approach limits downside risk while allowing for some profit, making Bitcoin more attractive to institutional investors seeking balanced risk exposure [1]. NYDIG data shows that Bitcoin’s volatility has been declining over the past year, potentially creating a self-reinforcing cycle of lower volatility and increased spot demand [1].

In addition to the options limit adjustment, the SEC approved in-kind creation and redemption for Bitcoin ETFs, a feature long sought by ETF providers. This mechanism allows investors to exchange physical Bitcoin for ETF shares and vice versa, improving market efficiency and broadening access for investors [1]. Cipolaro emphasized that this change will likely reshape market dynamics, particularly for Authorized Participants (APs), many of whom lack the crypto infrastructure to participate fully in arbitrage opportunities [1]. Currently, only two APs—Jane Street and Virtu—have both ETF and crypto trading capabilities, suggesting that others may need to acquire or partner with crypto entities to remain competitive [1].

The regulatory updates come amid a broader shift toward institutional adoption of Bitcoin. Recent policy changes, such as the repeal of the SAB121 accounting rule and streamlined regulations, are seen as positive signals for traditional investors [2]. The SEC’s in-kind creation and redemption approval was described as a key step forward by market participants, with some analysts forecasting further integration of Bitcoin into mainstream finance [2].

While the current environment appears favorable for Bitcoin ETFs, the market remains speculative. Some traders are making bullish bets on Bitcoin’s price, with expectations that it could reach or surpass its historical high of approximately $123,000 [2]. However, these are analyst forecasts and not current market realities [2].

BlackRock’s position in the Bitcoin ETF market, bolstered by the SEC’s recent actions, appears strong, but long-term dominance will depend on the firm’s ability to navigate regulatory and operational challenges. The evolving landscape suggests that Bitcoin ETFs will continue to attract institutional attention, particularly as regulatory clarity improves and market structures adapt.

---

Source:

[1] Bitcoin News Today: SEC Boosts Bitcoin ETF Limits ...

https://www.ainvest.com/news/bitcoin-news-today-sec-boosts-bitcoin-etf-limits-blackrock-gains-edge-fidelity-2508/

[2] BTCUSD - BlackRock Bitcoin ETF set for 'monstrous lead' with ...

https://mx.advfn.com/bolsa-de-valores/COIN/BTCUSD/crypto-news/96551152/blackrock-bitcoin-etf-set-for-monstrous-lead-w