Bitcoin News
IBIT options volume hits 340,000 BTC contracts as institutional hedging grows
The surge in derivatives activity occurs as IBIT captures 45% of global BTC options open interest, overtaking Deribit, which holds 41.9%. While Deribit remains a choice for crypto-native traders, IBIT’s scale draws institutional capital into regulated US markets. The fund itself holds $84 billion in assets and carries 100% weight in Bitcoin. This massive scale exceeds the assets under management of the TLT government bond ETF. Trading volume in IBIT options reached 1.09 million contracts on a single day in June, with put options accounting for 67.27% of those transactions and call options accounting for 32.73%.
| Metric | IBIT | SPY |
|---|---|---|
| Assets Under Management | $84 billion | $823.2 billion |
| Management Fee | 0.25% | 0.09% |
| Bitcoin Exposure | 100% | 0% |
| Options Open Interest | 340,000 BTC | N/A |
Hedge fund liquidations drive volatility
The rapid price decline in IBIT often stems from the forced liquidation of highly leveraged positions held by non-crypto hedge funds. Parker White, Chief Investment Officer at DeFi Dev Corp, suspected that these funds attempted to use highly leveraged options to reverse losses, only to face total wipeouts as Bitcoin prices fell. This theory gained traction because the decline in Bitcoin and equities happened alongside low liquidation volumes on centralized financial platforms. When IBIT’s price plummeted 13% recently, it also saw $175 million in outflows, representing 40% of the $434 million net outflow across all 11 US Bitcoin ETFs.
The options market reacted with intense panic during these sell-offs. Put options, which investors use to hedge downside risk, commanded a premium of over 25 volatility points above call options, marking a new all-time high. One specific put option with a $35.50 strike price expiring on June 26, 2026, saw 20,499 contracts transacted during a period of high activity. These long-dated puts reflected a massive demand for protection as the fund’s price hit its 15-month low. The premium for these put options reached approximately $900 million.
Traders face significant risks when navigating these spreads. Because IBIT is a relatively new product with limited activity, bid-ask spreads can stay wide. You should expect higher costs when trying to enter positions during periods of low liquidity. The market also sees high implied volatility, with an average of around 70% across available option cycles. This high cost makes options expensive for buyers, though it benefits those selling volatility to reduce cost basis. Can the market maintain this level of institutional hedging if Bitcoin enters a prolonged bear trend?
IBIT options strike price data
The distribution of open interest across different strikes shows where investors place their bets. Currently, the total put open interest stands at 26,642 contracts, while call open interest sits at 12,921. This results in a put-call open interest ratio of 2.06. Large amounts of interest cluster around specific price points. For example, the $45.00 strike price holds 7,281 in call open interest, while the $42.00 strike holds 5,377. Some traders look much further out, with call options for a $100 strike price expiring in 2026 and 2027 seeing volumes of 70 million and 30 million contracts respectively.
| Strike Price | Type | Open Interest | 1D Change |
|---|---|---|---|
| $40.00 | Put | 8 | +22.19% |
| $42.00 | Put | 5,377 | -32.71% |
| $45.00 | Call | 7,281 | -57.69% |
| $46.00 | Call | 1,651 | -28.33% |
| $47.00 | Call | 2,314 | -13.39% |
| $50.00 | Call | 1,187 | 0.00% |
Specific trades reveal the direction of institutional interest. At a price of $33.84, a $35.50 strike put option expiring in June 2026 transacted 20,499 contracts, representing $3.48 million in turnover. Higher strikes also attract volume, such as the $47.00 strike with 2,314 in open interest. However, many strikes near the current price see much lower activity, with some $40.00 and $40.50 puts showing only single-digit contract counts.
Comparison with traditional equity ETFs
IBIT performs differently than traditional equity products like SPY or fixed income funds like IBTM. While SPY tracks the S&P 500 and offers a 0.99% dividend yield, IBIT focuses entirely on Bitcoin price movements. The volatility profile of Bitcoin makes it unique. Bitcoin exhibits high volatility and high vol of vol, meaning its price swings are often larger than those of the S&P 500. Furthermore, Bitcoin shows a positive spot/vol correlation, where the asset often becomes more volatile as the price rises. This differs from the S&P 500, where volatility typically drops when the index rallies.
| Metric | IBIT | SPY | IBTM |
|---|---|---|---|
| Asset Class | ETF | Equity | Fixed Income |
| Expense Ratio | 0.25% | 0.09% | 0.07% |
| 1Y Return | N/A | +14.35% | -1.69% |
| Volatility (Annualized) | High | 14.3% | 7.4% |
IBIT’s strategy involves a long Bitcoin and short US dollar position. This makes it a direct play on the strength of Bitcoin relative to the dollar. In contrast, the ProShares Bitcoin Strategy ETF (BITO) also uses a long BTC and short USD strategy but is an actively managed fund with a 0.95% expense ratio. IBIT remains the more efficient way to access Bitcoin exposure due to its lower fee and passive management style.
The sheer volume in IBIT options suggests that professional traders use the product to "hudl" or hedge digital longs. Instead of selling their Bitcoin, they buy puts to protect their downside. This creates a massive ecosystem of liquidity that supports the ETF. Even with the recent 13% price drop, the scale of the options market remains a central component of Bitcoin’s price discovery. The high level of put interest suggests that many participants still expect further downward pressure.
