As a seasoned analyst with over two decades of experience in traditional finance and cryptocurrency markets, I find Jeff Park’s perspective on Bitcoin ETF options both insightful and intriguing. His understanding of the unique dynamics between money supply, price stability, and Bitcoin’s hard-capped total supply is commendable.
According to Jeff Park, the leader of alpha strategies at Bitwise Asset Management, it’s highly unlikely that Bitcoin ETF options would result in a decrease in the volatility experienced by the base digital currency.
According to Park’s explanation, money functions by allowing a tradeoff between the cost and the amount of goods or services we can buy. Central banks control the money supply to maintain price stability. In contrast, Bitcoin has a fixed total supply of 21 million coins. This implies that buyers give up the assurance of a stable price, instead experiencing significant fluctuations in value.
A massive development
This past Friday, the Securities and Exchange Commission (SEC) approved the trading of options for BlackRock’s groundbreaking iShares Bitcoin Trust (IBIT). This innovative product allows investors to increase their investment exposure towards the foremost cryptocurrency.
On Saturday, Park discussed how the approval of Bitcoin ETF options represents a significant milestone for the cryptocurrency market, referring to it as “an unprecedented leap forward.” This is because this particular product signifies the initial instance where the financial sector has introduced leverage on an unchanging supply commodity like Bitcoin.
In my analysis, I’ve observed that Bitcoin’s synthetic notional exposure can now expand at an exponential rate, thanks to Park’s findings. This growth significantly boosts the financial usefulness of Exchange-Traded Funds (ETFs).
Furthermore, options traders can gain a greater potential return (or ‘delta’) per unit of premium paid. Essentially, they’ll get a higher ‘bang for their buck’, as they’re investing the same amount but receiving more in terms of profit potential.
The implied volatility of Bitcoin often rises in correlation with its current value, indicating a negative relationship between it and Vanna. A gamma squeeze typically triggers a rapid surge in price.
No fake supply
According to well-known on-chain expert Willy Woo, the supply of Bitcoin is no longer being tightly controlled because of the presence of synthetic exposure. His point is that the creation of derivatives enables holders of dollars to effectively sell Bitcoin.
Contrarily to this assertion, Park does not concur with the view that options do not generate artificial Bitcoin supply; rather, he believes they expedite the arrival at the steady-state pricing of Bitcoins, which tends to be higher. He expressed this perspective in a social media post.
Read More
- SOL PREDICTION. SOL cryptocurrency
- BTC PREDICTION. BTC cryptocurrency
- USD ZAR PREDICTION
- CKB PREDICTION. CKB cryptocurrency
- USD COP PREDICTION
- LUNC PREDICTION. LUNC cryptocurrency
- EUR ILS PREDICTION
- REF PREDICTION. REF cryptocurrency
- TROY PREDICTION. TROY cryptocurrency
- LBT PREDICTION. LBT cryptocurrency
2024-09-22 22:43