Anika Begay
Nasdaq and NYSE have reportedly shelved their Bitcoin ETF options plans, a major setback for investors looking for more accessible cryptocurrency trading.
This comes as both exchanges have recalled their applications designed to list and trade options based on Bitcoin ETFs. In a move that we might say is surprisingly not what most people expected, a debate over whether options trading in this space is worthwhile has been sparked in the cryptocurrency community.
Regulatory obstacles
The regulatory landscape has been pretty much constant in terms of the challenge for cryptocurrency innovation. It took the industry nearly a decade of effort to get spot Bitcoin ETFs approved, and the road to options trading is still fraught with obstacles.
The U.S. Securities and Exchange Commission has been very careful, and recent withdrawals by Nasdaq and NYSE only underscore the difficulties inherent in the process. Industry participants had previously estimated that options could come as early as late 2024, but recent events seem to indicate otherwise.
NASDAQ and NYSE have joined CBOE in withdrawing their applications to allow options to trade on Bitcoin ETFs. I expect them to resubmit the application in the coming days or weeks, as we have seen from CBOE. https://t.co/8trtqNBVTx photo.twitter.com/YC1U2SgAVA
— James Seyffart (@JSeyff) August 15, 2024
Bloomberg ETF analyst James Seyffart is one of the optimistic voices who thought options trading could start soon. He said the SEC had a maximum limit on decisions on several applications, including applications for options on Bitcoin ETFs.
But the fact that has been revealed by the recent pullbacks since those announcements is that exchanges are becoming increasingly risk-averse in a still-developing regulatory environment. It represents a bit of uncertainty thrown into play for investors looking at options as a trading strategy.
Market reactions
The market reacted cautiously but with some force to this news. In particular, the price of Bitcoin recently bounced above the $70,000 level from previous selling pressure attributed to ETF-related outflows.
Analysts have noted that this could impact trading dynamics, particularly the price of Bitcoin. According to investors and analysts, the recent rise in Bitcoin’s value, attributed to easing ETF outflows and a favorable macroeconomic environment, may ultimately prove not to be good enough to sustain investor confidence if options trading does not pick up.
Source: Farside Investors
Bitcoin ETF flows were positive on Thursday after net outflows the previous day, according to data from Farside Investors. Outflows from Grayscale Bitcoin Trust slowed to $25 million, while Grayscale’s Bitcoin Mini Trust BTC hit $13.7 million after two days of flat flows.
According to Swan Bitcoin analysts, the SEC may very well be waiting for the right time to see more stability in the market before launching additional products. Analysts believe that the agency is cautious about the current fluctuations in the price of Bitcoin, which could make trading options a little difficult.
Looking forward
Bitcoin ETF options have developed, but their future is uncertain. In fact, some have even claimed that the issue would be resolved by the end of 2024. However, on the other hand, it is believed that the regulation is much more complex than it seems at first glance and that a clearer guideline could be developed by 2025.
Featured image from Pexels, chart from TradingView
