Bitcoin Breaks $94,000 Following Launch of ETF Options. What's Next for Its Price?

Trading for options on BlackRock's Bitcoin spot ETFs commenced on Nasdaq this Tuesday, marking a new approach to engaging with Bitcoin's market movements. In the opening hour of trading, the volume of options contracts reached 73,000, placing IBIT among the top 20 most traded non-index options, as reported by Nasdaq. The options achieved an unprecedented notional exposure of $1.9 billion. Bloomberg's ETF analysts have noted that the $1.9 billion in notional exposure on the first day was "unheard of for day one," particularly in comparison to the $363 million seen by Bitcoin futures ETFs during its debut several years earlier.

Investors find several advantages in using options for the Bitcoin ETF. Primarily, these options serve as a strategic tool for hedging against potential losses in Bitcoin investments, an essential measure given the cryptocurrency's propensity for rapid and significant price changes. This hedging capability is crucial for managing risk in the volatile Bitcoin market.

The options market for major ETFs often sees high activity and is predominantly utilized by advanced traders. For instance, data from Interactive Brokers over the last five business days shows that their clients placed more options orders for Nasdaq and S&P 500 ETFs than for the ETFs themselves.

▶ How has Bitcoin's price changed with each new product launch historically?

Bitcoin futures were launched on December 10, 2017, with the price rising by 1.89% on the day. Bitcoin futures ETFs were launched on October 19, 2021, with Bitcoin's price increasing by 3.58% on the day. Subsequently, Bitcoin prices were continuously suppressed due to ongoing rate hikes by the Federal Reserve.

On January 11, 2024, Bitcoin spot ETFs began trading. Bitcoin reached a peak of nearly $49,000 in the days before the announcement but cooled off in the following weeks. Still, spot Bitcoin ETFs have been celebrated as the most successful ETF launches ever recorded. The launch of spot Bitcoin ETFs has encouraged certain US state funds to adopt cryptocurrency investments. According to a CNF report, the State of Wisconsin Investment Board (SWIB) has made investments in Bitcoin via Grayscale and BlackRock ETFs.

This Tuesday, Bitcoin ETF options launched, with Bitcoin's price rising about 2% on the day. On November 20, Bitcoin's price briefly reached $94,000.

▶ Where is Bitcoin's price headed next?

The recent rise in Bitcoin is not only due to the launch of options but also due to Donald Trump's election. The Bitcoin market is also thriving on expectations that the new Trump administration will implement pro-crypto policies. Many investors are optimistic that the surge will persist in the days ahead.

As Bitcoin approaches the $100,000 milestone, BCA Research has forecasted in its latest report that Bitcoin's price is poised to reach $200,000 soon. Moreover, Ali Martinez, a crypto market analyst from Onchain, has shared a chart indicating that Bitcoin could escalate to $150,000 if it adheres to past trends. In a similar vein, Crypto Rover, another crypto market specialist, has released a chart suggesting that Bitcoin's value could exceed $200,000.