ETF experts expect bitcoin ETFs, which debuted this month, to spark a new wave of cryptocurrency products.
Catherine Clay of Cboe Global Markets believes options are a natural evolution of… Bitcoin ETFs.
“We think the benefit of options, and what they provide the end investor in terms of downside hedging, specific risk exposures in bitcoin, would really help the end investor and the ecosystem,” the firm’s head of global derivatives told CNBC. ETF Edge” this week.
Cboe, the largest US options exchange, filed an application with the Securities and Exchange Commission on January 5 to offer options linked to products traded on the Bitcoin exchange. It expects these options to begin trading later this year, according to its press release.
According to Dave Nadig, financial futurist at VettaFi, options related to cryptocurrency funds could attract institutional investors, who have been more hesitant to invest in the digital asset class.
“You’ll start to see all kinds of hedge fund players in this space,” he said in the same interview. “People who might not have traditionally speculated on cryptocurrencies directly in the cryptocurrency ecosystem will now have something to play with.”
Nadig also suggested that zero-day options — contracts that expire on the same day they are traded, known as “0DTEs” — would be the ultimate target for bitcoin derivatives products.
“If what happens in bitcoin is what happens in individual stocks, we will see retail in particular and many institutions moving toward day zero to trade expiry options on bitcoin itself,” he said.
However, Cboe’s Clay warned that these products may be a long way off.
“We still haven’t even received approval to list options, so let’s not get ahead of ourselves and think about 0DTEs,” she said. “We want to have options on these ETFs in a very smart, thoughtful way that actually … builds the ecosystem for new entrants into the market.”
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