Bitcoin ETF options stagnate as Nasdaq and NYSE hit the brakes

Nasdaq and NYSE have reportedly dropped plans for Bitcoin ETF options, creating a major hurdle for investors looking for more accessible cryptocurrency trading.

This comes as both exchanges have pulled their apps meant to list and trade options based on Bitcoin ETFs. In a move that is, arguably, not what most people expected, a debate has arisen in the cryptocurrency community about whether options trading in this arena is even appropriate.

Regulatory hurdles

The regulatory landscape has been fairly consistent in terms of challenging cryptocurrency innovation. It has taken the industry nearly a decade of effort to get Bitcoin spot ETFs approved, and the road to options trading is still fraught with obstacles.

The US Securities and Exchange Commission has been very cautious, and recent withdrawals from Nasdaq and NYSE only underline the difficulties involved in the process. Industry players had previously estimated that options could arrive by the end of 2024, but recent events seem to indicate otherwise.

NASDAQ and NYSE have joined CBOE and withdrawn their applications to allow trading of options on Bitcoin ETFs. I expect them to resubmit in the coming days or weeks, as we saw in the case of CBOE. https://t.co/8trtqNBVTx image.twitter.com/YC1U2SgAVA

—James Seyffart (@JSeyff) August 15, 2024

Bloomberg ETF analyst James Seyffart is one of the optimistic voices who believes options trading could begin at any time. He said the SEC was under a deadline to make decisions on several applications, which included filings for options on Bitcoin ETFs.

But the fact that has become clear from the recent pullbacks following those announcements is that exchanges are increasingly risk-averse in a still-developing regulatory environment, presenting a layer of uncertainty for investors looking at options as a trading strategy.

Market reactions

The market reacted cautiously, but with some strength, to this news. It is worth noting that the Bitcoin price recently bounced above the $70,000 level, following previous selling pressures attributed to ETF-related fund outflows.

Analysts have pointed out that this could have an influence on trading dynamics, particularly on the price of Bitcoin. According to investors and analysts, the recent rally in Bitcoin value, attributed to declining ETF outflows and the favourable macroeconomic environment, may ultimately prove insufficient to maintain investor confidence if options trading does not resume.

Source: Farside Investors

Bitcoin ETF flows were positive on Thursday after net outflows the previous day, according to data from Farside Investors. Grayscale Bitcoin Trust outflows slowed to $25 million, while Grayscale’s Bitcoin Mini Trust BTC hit $13.7 million after two days of stable flows.

According to Swan Bitcoin analysts, the SEC might be waiting for the right time to see more market stability before launching new products. Analysts believe that the agency is cautious about the current fluctuations in the Bitcoin price, which could make trading options a bit complex.

Looking to the future

Bitcoin ETF options have been developing, but their future is uncertain. In fact, some have even said that by the end of 2024, the matter would be resolved. However, on the other hand, it is believed that the regulation is much more complex than it actually appears at first and that it will not be until 2025 that a clearer guideline can be developed.

Featured image from Pexels, chart from TradingView