Bitcoin ETF Options Are Sending BTC's Price Parabolic with James Seyffart
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is is safe to say that, uh, this will bring in more liquidity, more capital a in could be very beneficial for the Price of big corn as we had into twenty twenty five?

yes. So honestly, right now, I would say this is probably increase. These options are probably part of the reason um that we were sent to new all time highs in bitcoin.

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I'm your house, tony Edward. And my guess today is James safet, who is an etf search analysts at bloomberg intelligence. James, good to see you.

Yeah, good to see you. Only happy to be back.

James. Lots to talk about the options trading for etf between E, T, S. Have gone live. Uh, yesterday a blackrock went live and today I believe gray scale a bit wise and some others are going live. What is your initial take on how these things have been training so far?

Yeah I mean, just flat out. It's, uh, pretty big success. And if you've been followed in the space and with these T F launches, it's been just success after success after success.

Matter how you how you slice IT. I mean even even outside of the the beats and crypto tf world, just etf in general are having a record breaking year. We're likely going to see over a trillion dollars of follows to etf in the united states, which just a mind boggling number. Um but um yeah the the the options were very successful.

The first day for a bit option yesterday saw about one point nine um billion dollars in notional trading um so basically exploded I bit at worth one point nine billion dollars was exchange chance in the option in the first step trading um and today you mentioned there's a bunch of others that have come online so it's bit wise, very skills able product gbt C A B tc uh arc arc b and fidelities f BTC. So I mean, all of them will come online. They are a fraction of the training volume that I bit is seeing today.

So are from looking at this in the same notional levels, it's as of the two thirties. So there's still and I want to have left trading. There's been about one point four billion innocentina for I bit and the rest is less than one hundred million. So um yeah it's it's heavily told towards, uh I bet, which kind of makes sense that honestly the volume for I bet itself on its actuality of shares is is farther away um the leader in the space.

James, for those who may not understand the options market and the trading and so forth, why is this beneficial? What does IT bring to bitcoin or the E T S?

Yeah I mean, really what he does is that increases the liquidity profile of the underlying products and the bacon on T F specifically. Um but at the end of the day, IT IT also allows for more targeted type exposure, more um long shot calls, if you will. So um what we've seen in the trading so far, this is happening today and IT was happening.

IT happened yesterday on eyeball first day. A lot of the trading and interests in these options is heavily tilted IT towards of money call options. So out of the money means like ah so if it's a call option, it's it's above the current Price.

So if were looking at a bit for it's currently trading around fifty three dollars to share um almost all of the call options and all of the event options contracts in general. Um r for strike crisis above that fifty three dollars vel. So there's even numbers.

Uh one of the more traded strike Prices in this instance was a one hundred dollars strike Price which is a cool until like one hundred seventy five hundred eighty thousand dollars. Ackroyd, um so there's a lot of people just taking long charge, which tells me a lot of this is more retail than necessarily institutional demand going on here is not a lot of like hedging the risk in doing different things like that. It's a lot of paid, basically people gambling and taking long shots and ebell ding on the the outsider of bitcoin in the big M T. S.

So is IT safe to say that, uh, this will bring in more liquidity, more capital uh, and could be very, very efficient for the Price of big coin as we had into twenty twenty five?

yes. So honestly, right now I would say this is probably created these options are ably part of the reason um that we s were sent to new all time hires in bitcoin, particularly as I mentioned, with the way that the things rescued, like just put some numbers out, they're orn in the way you look at this usually is a put call ratio.

And usually if you're a book or ratio one, that means you have an equal number of put traded and an equal number of calls strait. In this case, the pull call ratio is right around point two two um so basically more than four four point four times the amount of trading is happening in call options and IT isn't put option. So that's way more heavily tilted and towards the the bulli yeah so that's definitely the case.

I would say I think short term, this is probably increasing. Ballet IT probably drive it's helping to drive Prices up at this time. IT could do the opposite as well if we see like the ratio go away over wanted more tilt and towards puts.

Um but I think over the long term of these options are likely to decrease the volatile of the space because there's going to be a lot more people that can, you know hedge the risks. They can sell covered calls so they can sell calls above the pricing and are an income. But and you're giving up some your websites.

So there's going to be like ways and other that institutions can create product structure, products, other E T S. The problem is these etf, they were proved. So this approve process was rather concentrate. I mean, I ve talked you about like the etf process and um for etf there two two avenues. You needed uh corporate finance of division in the S C and you needed division of treating markets and they both needed to approve IT.

Um for these you have to go through the S C C division of treating markets that seemed nineteen before process, and you also need to prove from the cftc and sign off from the occ to list these things. So that process just got completed battle sted this week. But part of the approval process from the S C C, as they had a twenty five thousand position limit.

So essentially, you can own more than twenty five thousand contracts as individual or identity. What have you? So what that does is one that's very abNormal, particularly for products as liquid as these are.

But the cc is worried about manipulation of the underline Price of decline through these options. They don't want that to happen. But twenty five thousands, the lowest limit they have most vast, vast majority.

Vt are some what way, way lower volume than I bit for example. Um have two hundred thousand, two hundred fifty thousand, two hundred fifty contract, thousand contract position limit. So we're talking very low limits. I'm expecting those will go up.

Um but the those limits likely in that we're not going to see too many like etf product based on these options launch because they're not going IT once they get to a certain size, they're not going to be able to a go through those position limits. The benefit of those position limits though is the likes of the other products you're talking about, the ones that launched day, the ones that are not I bit. So you're fidelity, your gray scale products, your arc products, your bit wise products, if you hit those position limit and you can go to another product and the position limit to restarted again.

So you it's twenty five thousand contracts per uh per products. So um theoretically, I could help drive like a little Better competition. But if if today's any indication I talk you about the numbers. I mean, it's it's heavily, heavily secured. All the all the trading yet is still it's in the point to to uh put call ratio is still towards calls and it's all still very heavily tilted towards I bit strating.

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And I am assuming that we will probably see options for the e 点 M T S public in twenty twenty five。 You hearing anybody talking about is too early.

I wrote about IT today actually. So the they they are already um mazda blackrock filed. Um I think August six are earlier, early August for that nineteen before the process.

So final deadline for that is early April. So theoretically, if the the way things usually work as they approved, like right around the deadlines, theoretically I can't imagine them deny these after approving the bitcoin etf options. So they get approved in April.

I don't know what the indication will be. So the S C C technically approve these equity f options back and of and we didn't get c ftc approval until this week. So I D november mid delay in november.

So I don't know if they'll take as long so directly to see approve in April. And if you're following the same guideline, IT could be another couple months, you know um may, june um before these things actually less. But theoretically, ally, maybe we'll just move quicker because they already done that now and they know how they're going to handle things.

But ah only time will tell. But yeah if theory m options are there, m etf options are likely to come alive ah in twenty twenty five. And I honestly, I don't think that even there's a lot of things in the space that were impacted by the election that, that is not one of them that something that was going to happen no matter what.

Yeah absolutely. Um now as far as other big quin E T products I ously, we get the options trading. I've been hearing different types of things that exist to trade. Fy market might be on the horizon in two thousand and twenty five. Are you are there any like top three that you think may happen in two thousand twenty five?

Yeah, I mean, IT depends. So I talk about like the position limits issue, like so if you wanted to do a lot of life, the ative base type products like covered calls, they're going to be like gray scale has filed for that. There's been about a few other filings.

They're focused on that. There's some outdoor they do, but they use like they become futures etf options in different things that is just not as efficient also. Um the one of the hottest areas in in E T.

Right now or they are called they're basically structure product are etf. So defined outcome etf, buffer etf uh the broader catch ery would be defined outcome E T S where you can like you know sell selling option above a certain Price and buy options below and offsetting um Prices. And what you end up is like this defined outcome.

So like i'm only going to get up to potentially fifteen percent return over this given time period, typically one year, but i'm also gona guarantee that i'm not going to lose more than ten percent or if I I have some sort of buffer on the downside. So I don't lose go down completely. So you're basically giving outside for some downside protection.

I think there are a lot of people that might like to do that, particularly the space. A lot of things you hear from people is all I think the volatility is a feature, not a bug. In many cases, particularly for the bitcoin etps.

There are plenty of people who aren't going to touch this because of how volatilities and the offering products like that could be beneficial. But those products now are used. Things called flex options were just more customizable.

They are not exchange listed specifically, and flex options aren't allowed on these etf yet. So I think that will happen potentially in two thousand and twenty five. And you can see a very diverse range of of different products.

But um what else oh, there's the so hash dex, for example, has a filing out there to hold bitcoin in a theoria in a net f rapper um that should be coming due. I would i'm assuming the S C C will approve that. I don't know.

Gray skills, their their G D L C, which is their large cap index, uh, trust. They want to do the same thing to do. A GPT c and E Z, convert that to an etf.

So they filed for that. And bw has the crypt of ten index, which Operates all the same way as a trust, essentially with discounted premiums. potentially. We've also files those are things that theoretically could get proved that or know exactly what's gona happen there, but those are nineteen before that have been filed. I'm not sure what what are some of the other products you were thinking ah that you're hearing about my come come through and i'll tell you what the what I think the ads are.

Remember speaking to I think he was nature racy at the etf store and he was talking about as IT a in kind .

something oh yes. yeah. So right now um there's a few things, one that I think will happen in twenty and twenty five.

That's not specific to just a bit on E T. S, but that's that I think is more important is allowing staking in the etps right now. You cannot stake the authorities in the etps. I think under a new S C aden, particularly one that is all indications now will be a lot friendly. Or the crypto ah, they'll allow the etf stake.

And I think that's the biggest detriment to gardening asset because if you want exposure to a theory and you can get a via a product that either allow staking or you can get IT directly in stake yourself, like you're giving up a yield by putting IT into an etf and your paying else to hold IT. So it's it's kind of a hard cell. The main people who use our people who either can't hold a theory um directly or you know they have like an N I A or four in k or something that they ruled over.

That is an attack of venture account in they can only buy IT on a broker so that you might do IT that way. So there's a lot of issues with the demand side of theory media, so they have worked up recently. Um and the other one that's not allowed right now is in kind.

Um so basically, the way that etf work is you can always, at the end of the day, theoretically exchange the underlying for the shares the etf and exchange the shares etf for the underlying um bitcoin theory mt f there are only Operating in a cash create deine basis, which means you can actually put in theory um or bitcoin and get back to shares or vice first. So I can turn over my show the shares is an ap or mark maker and get back the underlying. That was something that it's from what I understand and from my research is what Caroline crenshaw doing SHE were basically we're going to prove these e tf back in december. SHE was like we're not going to allow in concrete redemption SHE was working about mark manipulation, K Y C A M L rules or whole bunch of different things. Um I think a more friendly S C C administration will will allow those things to go through.

So speaking about more friendly S C, C administration, we get a proper pal president coming in, president trump or president electrum. We have the most procyta congress ever coming into office, trump said. He's gonna put somebody who has chair who's, uh tech neutral or at least maybe procreate. Al, um today we ve got news that he is getting ready to figure who's going to to be leading the crypto role at the White house. So do you see all coin E T S like sona and X R P some which have been filed um and even these index E T S which include bitcoin in the top ten, all coins to get approve in twenty twenty five?

yes. So I remains to be seen on time lines. I think if IT does happen will probably much later in the year.

Um so right now, if you look at the president that we used to get that was set under j clay in um who is the chair by for ganglia and mainly under ginza ler. They kept saying they want in a regulated market of significant size that they can survey for market manipulation. In the case of bitcoin and a thorium, that market was C.

M. A futures contracts. There is nothing like that for these other products. So if they're going to follow that same president, it's unlikely that even those products sold ripple x py White coin.

Even there's been in each bar hera network filing, there's been A A whole bunch of them. Um theoretically, they're not going to to get approved. The problem is that just a precedent that's been set and it's not like written down in the law anywhere.

Um it's been kind of like there's a lot of things in the space, particular the sc, but really just in general that are like cout specific requirements theyve set up for this industry, right? Um so it's possible that they could say that's not the president anymore and coming with new rules require saying like this is what's required and then we'll get a Better understanding of what actually could figure reticent be put in meta rapper. The other problem is like two when you mentioned so in X R P um they are still being called security by this S C C admin in multiple lawsuits and and in some cases with rip directly to inlaws suit with with ripple.

So um that needs to be cleared up, right? So um I think it's possible uh that we could see some of these things to get approved in twenty twenty five, which you get to remember. We the filings we've seen our our talk about the two filings on the one thousand and one with division treating markets.

That's the one that starts the clock and that's the one where there's deadline. That's when the things need to happen. The other filing, the s ones or the perspective is that go through division, corporate finance doesn't have that deadline and that's what all these all coin filings are.

The one thousand before that were filed initially happened, drawn. So there's no clock that started yet and that clock would be like two hundred sixty, two hundred forty days. So even if they file now, it's gonna be like a long ways into twenty and twenty five before they theoretically could even get approved.

Um that said, again, that's kind of president, but that's president that's been around forever that they actually wait for the full time. But theoretically they could approve after forty five days after filing if if they really wanted to completely break president. But yeah there's there's a lot of things um up in the air right now. The other promise like we don't know who's going to be the S C C chair and IT takes time like I don't I don't know that this is going to be the first thing and he going to do when he gets into office on ungenerous twenty first twenty three. Um so I took until major june, I think for for gains, altitude and so IT could be a while before there's any sort of like real true movement at the S C C.

Yeah that definitely makes sense. Uh great points. A question. Um you may dress this, but does the index of what bit wise is doing a grey scale? Uh, I do you think the features aspect that the top ten carton doesn't have features X R P along or whatever that would prevent that index basket etf from being approved?

Yeah so I can make two arguments on this like I could argue both sides right. Um so one argument would be like the vast major of these assets in all of those products GLC and the bit w conversion, um it's like almost like eighty plus percent or ninety percent is in um IT point in a theoria and those are already approved.

So you can make the argument that as long as like IT stays below a certain percentage, many cases a lot of things that the C C set up is like eighty percent is like this structure level. So you can call yourself A A girl stock fund if you're holding like IT has to be at least eighty percent in this. That's the way things a lot of times work.

So you could easily make the argument that yeah, these things might not be allowed as a stand alone. But theoretically, ally, there are smaller portion, the product. That said, IT doesn't really matter if I wanted to be hard lined about the rules i'm not going to allow like if I was gangs er I don't think there's any shot that these things would get through.

Um so I I can see both sides so um but those deadlines are are they're already followed those one thousand before, so we'll have some deadlines on those. Um and they're actually onna happen at some point in twenty twenty five that either be approved or denied. Where is the other you know stand alone. So rip, what have you um cardono any sort of filing like that? There has been known to files, so there is no deadlines.

Yeah, that definitely makes sense. Well, the say that leaves twenty twenty five going to be very interesting with this new chair and what thump is looking to do. It's going to be, I think, a really good time for the market. But I know like you outline clearly, there's a lot of steps that have to happen for these things to get approved.

yeah. I mean, you should be relatively optimistic on these things happening. It's just it's really kind of more a matter of when not if at this point, particularly under this admin.

Um just you need I don't know how no one can know how fast things are going to move in. Um i'm sure we'll get some more indications in the coming month to and what will we have, have like more for more a firm timelines on some of this. But right now it's it's not really very firm.

Yeah, James, uh, thank you so much for the insights. Appreciate the knowledge, my friend. Thank you for joining me.

Yeah, happy to do with thanks to me.

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