Nasdaq Pursues Approval for Bitcoin Index Options

Options trading would provide institutional investors a mechanism to hedge risks while allowing traders to enhance their purchasing capabilities.

Overview of Nasdaq’s Proposal

Nasdaq, a prominent American stock exchange, is reportedly seeking regulatory approval to introduce options based on a Bitcoin index.

On August 27, it was publicly announced that the exchange aims to launch these index options to provide institutions and traders an alternative method to manage their Bitcoin exposure.

According to Matt Hougan, Chief Investment Officer at Bitwise, having options available for Bitcoin is essential for the asset class to gain acceptance. He noted that the absence of such options contributes to an incomplete liquidity landscape, which could potentially be addressed by offering ETF options.

Details of the Bitcoin Index Options

Options are a type of financial instrument that grants traders the right to buy or sell assets like stocks, indexes, and ETFs at a predetermined price on a specific date. This functionality empowers institutional investors to mitigate risks while enabling traders to amplify their buying capacity.

The proposed Bitcoin Index Options would rely on the CME CF Bitcoin Real-Time Index, which is developed by CF Benchmarks. This index effectively tracks Bitcoin futures and options contracts traded on the CME Group’s platform.

Currently, the U.S. Securities and Exchange Commission (SEC) has not yet authorized any investment options that are tied to spot Bitcoin ETFs. This includes Nasdaq’s application to trade options related to the iShares Bitcoin Trust (IBIT) ETF managed by BlackRock.

Recent Activity of BlackRock ETF

This development coincides with BlackRock’s spot Bitcoin ETF, which recently experienced its highest daily net inflow in 35 days. On August 26, the IBIT recorded a net inflow of $224.1 million, marking the most substantial inflow for the ETF since July 22. This trend suggests that investors may be capitalizing on a slight decline in Bitcoin’s price following a prior rally.

The inflows to BlackRock’s IBIT have propelled the total net inflow for 11 U.S. spot Bitcoin ETFs to $202.6 million in a single day. In contrast, other investment entities, including Bitwise, Fidelity, and VanEck, collectively faced a net outflow of $32.1 million.

Additionally, crypto investment products have achieved significant inflows, with reports indicating that from August 18 to August 24, digital asset investment products saw a total weekly inflow of $533 million, according to data from an investment firm.