Bitcoin Holdings in ETFs Climb to 1.14 Million, Fueling Rise in Options Trading

Luzi Ann Santos joined discussion · Jan 1 02:15

U.S. exchange traded funds now hold 1.14 million in $Bitcoin (BTC.CC)$, surpassing the stake of the cryptocurrency's creator Satoshi Nakamoto and fueling the rise in options trading tied to the asset, according to a Bloomberg Intelligence report.

The 11 spot Bitcoin ETFs launched in January now hold $106 billion in total assets, just $17 billion below those backed by gold, Eric Balchunas, an analyst at Bloomberg Intelligence wrote in a note Tuesday. That spurred the massive growth in bitcoin ETF options trading, with their combined open interest now at a notional value of $12 billion, according to the note.

(To see the U.S. options market page, including the Bitcoin ETF options, click here. For the top options by volume led by Nvidia and Tesla, click here.)

Bitcoin Holdings in ETFs Climb to 1.14 Million, Fueling Rise in Options Trading

The regulatory approval for ETFs tied to spot Bitcoin fueled this year's initial rally to a record. The election of Donald Trump to the presidency and his subsequent pick to lead the Securities and Exchange Commission further propelled the asset further, helping push up prices to a fresh all-time high of $108,364 in mid-December.

While the rally has stalled in the past few trading days, bitcoin prices are still up more than 120% this year, dwarfing gold's 27% gain and the $S&P 500 Index (.SPX.US)$'s 23% rise.

Purchases from $MicroStrategy (MSTR.US)$ also bolstered demand for Bitcoin. The software company that generated just $116.7 million in revenue in its September quarter, holds about 446,400 Bitcoins as of Dec. 29, according to its latest filing with the SEC. That includes the 2,138 Bitcoins purchased between Dec. 23 and Dec. 29 for about $209 million using proceeds from its issuance and sale of shares.

MicroStrategy's Bitcoin holdings are worth $41.9 billion at today's prices. That compares with the company's market capital of $70.6 billion.

The company's bitcoin purchases also bolstered its share price rally. The stock more than quadrupled to $292.85, from $63.16 at the end of 2023. The company was able to join the tech-heavy $NASDAQ 100 Index (.NDX.US)$ this month after the surge in prices.

The potential for a Bitcoin reserve touted by Trump added to the positive sentiment that sent prices of the world's largest cryptocurrency soaring this year. While former New York Federal Reserve President Bill Dudley acknowledged that the bill in Congress that would require the government to buy 1 million Bitcoin for the reserve could send prices surging further, he said the move won't serve the government nor the public any good.

"There’s no exit strategy, so the purpose must be to push prices higher, not create value for the government — which would be stuck holding volatile tokens that produce no income," Dudley wrote in an opinion column for Bloomberg in early December.

Share your thoughts on Bitcoin in the comments section. Are you in the same camp as Dudley or in the HODL camp? Let your voice be heard by voting below.

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