The rollout of Bitcoin ETF options marks a major step forward, despite the limitations on positions.

BlackRock’s iShares Bitcoin Trust (IBIT) made a significant milestone this week by launching the first U.S. spot Bitcoin ETF with options. The launch on Tuesday gave IBIT a competitive edge, with its options starting a day ahead of other market players, who began trading their products on Wednesday.

The IBIT ETF, which currently holds a market cap of $44 billion, saw a notable $2 billion in options trading within the first 24 hours. The ETF itself also traded over $4 billion in volume, a figure surpassed only by the SPDR S&P 500 ETF (SPY), Invesco QQQ Trust (QQQ), and iShares Russell 2000 ETF (IWM), all of which boast much higher market caps, according to Coinglass data.

Eric Balchunas, a senior ETF analyst at Bloomberg, celebrated the remarkable day-one performance of IBIT options but indicated that it has yet to reach the trading levels of more established ETFs. “$1.9 billion in first-day trading volume is an extraordinary feat,” Balchunas remarked. “For context, BITO, which has been around for four years, only saw $363 million on its debut. But this was with a 25,000 contract limit, so it’s still not in the ‘big leagues’ yet, though it could reach that point in the coming days.”

The 25,000-contract position limit for IBIT options is more restrictive compared to traditional financial products. This cap limits market participants to holding a maximum of 25,000 contracts, a move aimed at preventing market manipulation, which has become a point of contention in the industry.

Jeff Park, the head of Alpha Strategies at Bitwise, expressed concerns over these limits, pointing out that the exercisable risk for IBIT options represents just 0.5% of the ETF’s total shares, much smaller than the standard 7%. For comparison, Bitcoin futures contracts on the CME allow for 2,000 contracts to be traded, which would translate to 175,000 IBIT contracts. Park suggested that the CME Group is more inclined to keep Bitcoin primarily as a futures product, with the CFTC and SEC placing these limits to avoid potential market disruptions.

Despite these constraints, Bitcoin’s price surged to new all-time highs above $94,000, reflecting continued bullish sentiment. Additionally, data from Glassnode shows that the options open interest for Bitcoin surpassed $40 billion, although Bitcoin futures remain the dominant product with $60 billion in open interest.

The growing interest in Bitcoin-linked financial products is further reflected in the inflow of capital, with Farside data showing a net inflow of $816.4 million into the spot Bitcoin ETF sector, bringing the total net inflows to $28.5 billion. As options trading continues to develop, Bitcoin’s presence in both the retail and institutional financial landscapes is poised for further growth.