Bitcoin risk management grows more popular as the 'just bet on price' era fades

Options are derivative contracts with a fixed expiry date that let traders bet on three things at once. They can bet on the direction of the price, on how big the swings will be and on timing, meaning by when a move will or won't happen.

As of Friday, the bitcoin derivatives market looked like this: Options tied to U.S. bitcoin exchange-traded funds had about $36 billion in open interest, with BlackRock’s IBIT accounting for nearly $35 billion of the total. Add in options on crypto-native platforms, and the figure rises to roughly $76 billion. When bitcoin futures, including perpetual futures and dated contracts, are taken into account, the overall market reaches about $129 billion.

ETF options alone are now about 47% of the bitcoin options market, which is mainly owned by Deribit. IBIT options have tripled since January 2025, when open interest was about $11 billion.

The growth in options is consistent with the pattern seen on U.S. equities, where options tied to the S&P 500 Index accounted for nearly 75% of all derivatives linked to the index and index equivalents as of last year.

The growing use of options is also visible in BlackRock’s expanding lineup of bitcoin-related funds. In June, the world’s largest asset manager introduced the iShares Bitcoin Premium Income ETF (BITA), which seeks monthly income by selling call options on a portion of its IBIT holdings, sacrificing some upside in exchange for option premiums. This week, it filed to offer a bitcoin buffer ETF that uses options to limit losses during a downturn, while also capping potential gains.