Bitcoin Options Will Reduce Volatility, Increase Investor Base, Galaxy Digital's Thorn Says

The availability of options on the sector leading $43 billion iShares Bitcoin Trust is likely to reduce volatility and increase the investor base for the original cryptocurrency, according to Galaxy Digital's Alex Thorn.

Nasdaq Inc. began offering options for the Invesco QQQ Trust Series 1 ETF (ticker QQQ) for the first time Tuesday, and more are likely to follow.

Availability of options on the ETF, which tracks the Nasdaq 100 Index and is the sector leader, will likely reduce volatility and increase the investor base for Bitcoin, according to Galaxy Digital Holdings Ltd.’s Alex Thorn.

“Over time as it’s more widely held, volatility will decrease, options will help dampen volatility and and as volatility comes down people can take larger position sizes,” Thorn, head of firmwide research, said Tuesday during an interview on Bloomberg Television.

Nasdaq applied to offer options for the iShares Bitcoin Trust ETF (ticker BITO) in January, but the Commodity Futures Trading Commission didn’t clear the way for those until this week. More are likely to follow, as Cboe Global Markets Inc. also filed paperwork with the SEC in January.

If volatility does decline, more investors will look toward Bitcoin for fundamental use cases rather than as just a high-risk bet, Thorn said. Institutions will be able to hedge more on Bitcoin and increase the liquidity, while also impacting retail trading in the event of a bull market, he said.

The crypto industry will also have to figure out how to maintain control with traditional finance moving into the space, he added.

While Thorn predicts that in the long-term options will help decrease volatility for Bitcoin, volatility is often what attracts investors. The token has rallied more than 100% in 2024, with the price hitting a record high of almost $94,000 on Tuesday.

The approval of Bitcoin ETFs for US investors in January by the Securities and Exchange Commission was the initial catalyst for this year’s surge in the price of the digital currency. BlackRock Inc. had been working with Nasdaq for 10 months to launch options and was able to introduce them after the CFTC cleared the way this week.

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