CryptoQuant Bitcoin Analysis Sees ETF Options Impacting Bitcoin Demand

Key points:

• Analysts say the SEC’s approval of options for the spot bitcoin ETF marks a significant shift in how institutional investors may engage with bitcoin, with potential implications for demand for the underlying asset.
• The U.S. Securities and Exchange Commission approved BlackRock’s proposal to list and trade options for its spot bitcoin ETF last Friday.

The recent approval for BlackRock’s Bitcoin ETF options raises concerns about a shift from physical Bitcoin to “paper” derivatives, according to CryptoQuant Bitcoin analysis.

CryptoQuant Bitcoin Analysis: Impact of IBIT Options on Bitcoin Supply

CryptoQuant questions whether demand for Bitcoin has, in fact, actually taken a hit from IBIT ETF options in its latest Bitcoin analysis. Pushed into paper derivatives by institutional traders, “paper Bitcoin” supply could increase and dampen demand for a spot investment in Bitcoin. That would not be too dissimilar from how supply in the futures market worked during the 2022 bear market.

Read more: CryptoQuant Bitcoin Analysis Signals Potential for Further Gains

Institutional Traders Shift to Paper Bitcoin: Insights from CryptoQuant

But CryptoQuant analysts caution that the effect this will have is increasing love for paper Bitcoin by institutional traders, decreasing direct investment into spot Bitcoin, and increasing open interest in derivatives. In other words, similar to gold markets, it may be derivatives trading driving demand for the physical asset, but there are concerns related to volatility and market dynamics.