Bitcoin is about to gain massive liquidity on a new proposal set in motion by Nasdaq, which seeks SEC approval for index options.
Nasdaq is seeking regulatory approval to introduce options trading on a bitcoin index, the exchange operator announced on Tuesday.
The U.S. Securities and Exchange Commission has not yet approved options linked to any of the individual exchange-traded funds (ETFs) tied to spot bitcoin prices that launched in January, including Nasdaq’s application to trade options on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF (IBIT.O).
The proposed index options would provide a quick and cost-effective way for institutional investors and traders to hedge their exposure to bitcoin, the largest cryptocurrency.
This influx of additional capital will bring massive liquidity to Bitcoin as a whole.
Matt Hougan, chief investment officer of Bitwise, emphasized the importance of making bitcoin options available to fully integrate this asset class into the market:
“We’re missing a part of the liquidity picture that ETF options would provide.”
Options are financial derivatives that give holders the right to buy or sell an asset, like a stock or ETF, at a predetermined price by a specific date.
They are a cost-efficient means for traders to boost their purchasing power and are often used by institutional investors to manage risk.
Nasdaq’s proposed Bitcoin Index Options would track the CME CF Bitcoin Real-Time Index, created by CF Benchmarks to monitor bitcoin futures and options contracts on the CME Group (CME.O).
While awaiting a decision from regulators on options for the new spot bitcoin ETFs, traders have turned to other products, including recently launched leveraged ETFs linked to bitcoin and options on those funds.
Exchanges began submitting applications for options on spot bitcoin ETFs as soon as it became clear that the SEC would approve the underlying ETFs in January.
However, in recent weeks, some exchanges have withdrawn and then resubmitted their applications in response to SEC feedback, per Reuters.
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Also Read: Analyst Now Says A Massive Bitcoin Short Squeeze is Coming
Other Crypto News Today
75% of Bitcoin (BTC) has now been held for more than 6 months according to fresh on-chain data that has been released.
A recent analysis of Bitcoin’s blockchain activity reveals that a significant portion of the cryptocurrency, roughly three-quarters, has remained untouched for at least six months.
This data, gathered by the blockchain analytics platform Glassnode, indicates that a large amount of Bitcoin is being held long-term, suggesting a strong belief in the asset’s future value.
This trend is particularly noteworthy given the recent price decline of Bitcoin, which has fallen by 21% from its all-time high.
Just a week ago, only about 45% of Bitcoin was inactive for at least six months, showing a rapid increase in long-term holding.
This suggests that despite recent price fluctuations, many Bitcoin holders remain confident in the asset’s long-term potential.
The fact that a large portion of Bitcoin hasn’t moved in months suggests that many investors are treating it as a long-term investment, holding onto it with the expectation that its value will rise in the future.
This “hodling” behavior also has the effect of reducing the amount of Bitcoin available for trading.
With less Bitcoin available and demand remaining high, the price of Bitcoin could potentially increase.
Experts had recently touched on Bitcoin’s major drop, but the cryptocurrency has now recovered since it’s monthly lower levels.
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Also Read: Here Is What Experts Are Now Saying About Bitcoin’s Plunge
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