BlackRock's IBIT Options Open Interest Surpasses Deribit to Claim the Top Spot: Wall Street is Dominating the Bitcoin Derivation Market

BlackRock's iShares Bitcoin Trust (IBIT) has surpassed the long-dominant offshore exchange Deribit in terms of associated Bitcoin Options Open Interest less than a year after its launch. As of last Friday, the open interest size of IBIT options was nearly $38 billion, while Deribit stood at $32 billion. This milestone event marks a structural shift in Bitcoin trading: Liquidity is moving from traditional, high-leverage-focused offshore exchanges to compliant products that are core regulated by the U.S. financial markets. As the world's largest Bitcoin ETF, IBIT's $87 billion Assets Under Management and highly competitive fee rate (0.25%, early reduced to 0.12%) have created a liquidity acceleration cycle, attracting significant institutional capital and solidifying TradFi's position in the crypto derivation market.

Regulatory Product Leadership: IBIT Disrupts the Bitcoin Options Landscape

The surge in IBIT Options market share is a reflection of traditional financial institutions achieving decisive victories in the encryption market:

• Market leadership changes hands: IBIT Options will be launched in November 2024, but it has quickly replaced Deribit, which has dominated the market since 2016, becoming the largest Bitcoin Options trading venue.
• Structural Change: This change indicates a fundamental shift in the way traders access Bitcoin. The market, which was previously controlled by offshore platforms seeking high leverage and low regulation, is now moving towards the core of regulated and compliant American financial products.
• Institutional Magnet: For large fund managers and corporate finance, the ability to hedge risks (i.e., hedge Bitcoin exposure) through IBIT, a regulated venue, is a strong attraction.

ETF Liquidity Cycle and Institutional Deep Participation

The explosive growth of IBIT is not only reflected in its asset scale but also in its activation of a self-reinforcing liquidity cycle:

• New High in Assets: IBIT has become the world's largest Bitcoin ETF, with Assets Under Management exceeding 87 billion USD. It reached the milestone of 70 billion USD in just 341 trading days, making it the fastest-growing ETF in history.
• Growth Drivers: The success of IBIT is attributed to its design – it provides investors with direct BTC exposure while eliminating the complexities of custody and wallets. Mainstream CEX is responsible for custody and offers a reporting structure suitable for mainstream investors. Its low fee rate of 0.25% (initially reduced to 0.12%) has also driven early capital inflow.
• Positive feedback loop: The increase in liquidity attracts more institutional funds, which further deepens market participation and liquidity, forming a virtuous cycle.

Market Ecosystem Restructuring: The Divergence of TradFi and Native Encryption

Although IBIT dominates, the market ecosystem is developing towards a dual-track system:

• The value of Deribit: Despite losing its leadership position in the Options market, Deribit remains favored by crypto-native traders and was acquired by a mainstream CEX in August for approximately $2.9 billion, indicating its continued value and expertise in the crypto derivation market.
• Ecosystem Differentiation: Analysts believe that market growth has reshaped the ecosystem. Offshore platforms will still attract speculative activities, but regulated products will anchor the main body of institutional interest. This may lead to the formation of two parallel systems: one rooted in a compliance system of Traditional Finance (TradFi), and the other focusing on a decentralized (DeFi) and high-leverage native encryption trading system.

Conclusion

The unclosed positions of IBIT Options surpassing Deribit are not just a numerical change; they symbolize the formal takeover of the Bitcoin market by the core of traditional finance in the United States. As compliance products offered by giants like BlackRock become the top choice for institutional capital, the structure of the crypto market is irreversibly evolving towards maturity and mainstream acceptance. Although Deribit remains a stronghold for crypto-native traders, this shift in liquidity clearly indicates that compliance and deep liquidity have become key to attracting large capital.

After IBIT successfully provided low-risk BTC exposure and hedging tools for institutions, do you think offshore exchanges will re-attract institutional clients by offering more innovative leveraged products?