BlackRock Poised to Expand Bitcoin ETF Lead After SEC Approves Options Trading

The U.S. Securities and Exchange Commission (SEC) recently implemented a significant change impacting Bitcoin ETFs by raising the cap on the number of options contracts allowed for most funds in this category. This adjustment is expected to further solidify BlackRock’s iShares Bitcoin Trust (IBIT) as the market leader.

SEC Raises Bitcoin ETF Options Limits

On July 29, the SEC approved a tenfold increase in options position limits, raising the maximum number of contracts from 25,000 to 250,000. This new limit applies to all exchange-traded funds (ETFs) with listed options, except for Fidelity’s Wise Origin Bitcoin Fund (FBTC), which was excluded from the expanded limit. Greg Cipolaro, head of research at crypto financial services firm NYDIG, noted that this change will likely widen IBIT’s already "monstrous" lead over competitors while diminishing FBTC’s position as the second-largest options player. He stated:

"The change is likely to widen the monstrous lead that IBIT already has over the other players, while it hobbles FBTC’s position as the second-largest options player."

BlackRock’s Bitcoin ETF Growth and Market Impact

BlackRock’s Bitcoin ETF has experienced unprecedented growth. In June, IBIT surpassed $70 billion in assets under management (AUM) faster than any ETF in history, including those linked to gold. As of August 4, IBIT ranked as the second-best ETF by monthly capital inflows, reflecting strong investor demand. Data from CoinGlass shows IBIT currently manages approximately $85.5 billion in AUM, roughly four times the size of FBTC, which holds about $21.35 billion. The increased options contract limits are expected to enable more flexible and larger trading strategies, fueling further growth. Cipolaro also highlighted that the expanded limits could help reduce Bitcoin’s price volatility, which has been easing recently. Despite this, Bitcoin continues to attract traders looking to capitalize on price movements, especially as volatility in traditional markets remains low.

Broader Market Implications

Beyond trading activity, the rule change may attract more institutional investors seeking stable, long-term Bitcoin exposure. Lower volatility tends to appeal to firms aiming for balanced risk allocation in their portfolios. Cipolaro explained that as Bitcoin becomes less unpredictable, it becomes more suitable for inclusion in long-term investment strategies, potentially increasing spot demand and drawing fresh capital into the market. The SEC’s July 29 decision was part of a broader package of ETF-related approvals, including:

• Authorization of in-kind creation and redemption processes to improve asset movement efficiency in ETFs.
• Approval of FLEX options, allowing funds to customize contracts to investor needs.
• Permission for options trading on the HODL ETF for the first time.
• Approval for Bitwise to list and trade its combined Bitcoin and Ethereum ETF on regulated exchanges.
Cipolaro believes these developments will reshape crypto-related ETF trading, broadening market access and enhancing market structure:

"These long-anticipated moves, some sought by fund sponsors since before the initial bitcoin ETF approvals, will likely have important impacts on market structure and investor access."

Shifting Trends in Spot ETF Flows

Despite the expanded options limits and growing institutional interest, spot Bitcoin ETFs experienced net outflows of $643 million between July 28 and August 1, ending a seven-week streak of inflows, according to Wu Blockchain. Conversely, spot Ethereum ETFs attracted $154 million during the same period, marking their twelfth consecutive week of positive inflows. This trend suggests a possible shift in investor preference toward Ethereum funds, although the increased options trading capacity may lure institutional investors back to Bitcoin ETFs.

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Frequently Asked Questions (FAQ)

Bitcoin ETF Options and Market Impact

Q: What is the SEC's recent decision regarding Bitcoin ETFs? A: The SEC has approved a tenfold increase in the number of options contracts allowed for most Bitcoin ETFs, raising the cap from 25,000 to 250,000. Q: Which Bitcoin ETF is expected to benefit most from this change? A: BlackRock's iShares Bitcoin Trust (IBIT) is expected to further solidify its market leadership due to these expanded options limits. Q: How does this change affect Fidelity's Wise Origin Bitcoin Fund (FBTC)? A: FBTC was excluded from the expanded limit, which is expected to diminish its position as a significant player in the Bitcoin ETF options market. Q: What are the potential benefits of increased options contract limits for Bitcoin ETFs? A: These limits are expected to allow for more flexible and larger trading strategies, potentially fueling further growth for Bitcoin ETFs. They may also help reduce Bitcoin's price volatility. Q: How might this SEC decision impact institutional investors? A: The rule change could attract more institutional investors seeking stable, long-term Bitcoin exposure, as lower volatility makes Bitcoin more suitable for long-term investment strategies. Q: Besides options limits, what other ETF-related changes did the SEC approve? A: The SEC also authorized in-kind creation and redemption processes for ETFs, approved FLEX options for customized contracts, and permitted options trading on the HODL ETF and the listing of Bitwise's combined Bitcoin and Ethereum ETF. Q: Have spot Bitcoin ETFs seen consistent inflows recently? A: No, despite the expanded options limits, spot Bitcoin ETFs experienced net outflows between July 28 and August 1, ending a seven-week streak of inflows. Q: Is there a notable trend in Ethereum ETFs compared to Bitcoin ETFs recently? A: Yes, spot Ethereum ETFs have attracted consistent inflows for twelve consecutive weeks, while spot Bitcoin ETFs recently saw net outflows.

Crypto Market AI's Take

The SEC's decision to increase options limits for Bitcoin ETFs, particularly benefiting BlackRock's IBIT, is a significant development in the evolving landscape of digital asset investment. This move signals a maturing market where regulatory frameworks are adapting to accommodate more sophisticated trading strategies. For investors and traders, this could translate into enhanced hedging capabilities and potentially smoother price action due to increased liquidity in the options market. At Crypto Market AI, we are closely monitoring these trends and integrating such insights into our AI-powered trading bots and market analysis tools. Our platform aims to provide users with the data-driven intelligence needed to navigate these dynamic market conditions effectively, understanding how regulatory changes can influence asset performance and overall market structure.

More to Read:

• Bitcoin ETFs: A Comprehensive Guide to Understanding Their Impact
• Understanding Cryptocurrency Options Trading
• The Future of AI in Crypto Trading

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Originally published at Cointribune on Tue, 05 Aug 2025