The US Securities and Exchange Commission (SEC) has recently approved alternatives trading for BlackRock’s IBIT, a Bitcoin exchange-traded fund (ETF), which is expected to improve liquidity and attract institutional investors. However, the SEC has delayed its decision on Ethereum ETF alternatives, leaving investors and analysts wondering about the future of Ethereum-based funds.

Bitcoin ETFs Riding a Wave of Optimism

The approval of alternatives trading for IBIT has sent a bullish signal to the market, with Bitcoin prices trending upward over the past week. Analysts believe that this momentum could lead to a gamma squeeze, similar to the one seen in the GameStop (GME) incident. A gamma squeeze occurs when investors buy large quantities of call options, forcing market makers to acquire the underlying asset to maintain balance, resulting in a rapid price increase.

Bitwise Asset Management’s head of research, Europe, André Dragosch, notes that the approval of physically settled options tied to IBIT could lead to a gamma squeeze if a large number of call options are purchased. This could result in rapid price movements in the Bitcoin market, similar to what was seen with GME.

Ethereum ETF Alternatives Delayed

In contrast, Ethereum funds have not been as fortunate, with the SEC delaying its decision on alternatives trading for Ethereum until mid-November. The delay has left investors and analysts wondering about the future of Ethereum-based funds.

Growth Potential in Derivatives Market

Despite the delay, analysts believe that the derivatives market has significant growth potential. VanEck’s Matthew Sigel, head of digital assets research, points out that the Bitcoin derivatives market is 279 times smaller than the equity and commodity markets. This suggests that there is still room for growth and development in the Bitcoin derivatives market.

The Ethereum derivatives market is even smaller, with the amount of Ethereum options being three times smaller than that of Bitcoin. It will be interesting to see if the SEC changes its tune by November and how the market responds.

Key Takeaways

• The SEC has approved alternatives trading for BlackRock’s IBIT, a Bitcoin ETF, which is expected to improve liquidity and attract institutional investors.
• Analysts believe that Bitcoin ETFs could experience a gamma squeeze, similar to the one seen in the GameStop incident.
• Ethereum ETF alternatives have been delayed until mid-November, leaving investors and analysts wondering about the future of Ethereum-based funds.
• The derivatives market has significant growth potential, with the Bitcoin derivatives market being 279 times smaller than the equity and commodity markets.