Wall Street Now Holds the Cards in Bitcoin Trading, Hedging, and Pricing

• How Is IBIT Reshaping Bitcoin Risk Pricing?
• Why Are Traders Using Puts as a Volatility Buffer?
• Can Offshore Markets Keep Up With Wall Street’s Pace?
• What’s Holding Back IBIT’s Next Growth Phase?

Wall Street has officially taken the reins of bitcoin trading, with institutional players like BlackRock's iShares Bitcoin Trust (IBIT) dominating the market. The surge in options trading around IBIT—now averaging $4 billion daily—signals a seismic shift in how Bitcoin is priced and hedged. Meanwhile, offshore crypto markets are playing catch-up as U.S. regulators weigh lifting position limits. This isn’t just speculation anymore; it’s risk management on a Wall Street scale.

How Is IBIT Reshaping Bitcoin Risk Pricing?

What started as a niche asset traded on offshore platforms is now firmly in the hands of U.S. institutional traders. BlackRock’s IBIT, with $86 billion in assets under management, has become the de facto benchmark for Bitcoin pricing. But the real story isn’t the fund itself—it’s the explosive growth of its options market. Open interest in IBIT options has more than tripled this year to $34 billion, outpacing most credit and emerging-market ETFs. Only large-cap, gold, and small-cap ETFs see more action.

Rocky Fishman, founder of Asym 500, put it bluntly: "It’s extremely rare for an ETF to develop an options market this large, let alone within eight months of launch." Institutional holders of IBIT have nearly doubled since December, and the fund now trades more options than any other Bitcoin ETF—despite holding just over half the assets of its peers. This isn’t wild speculation; it’s sophisticated risk management. As Kevin de Patoul, CEO of market Maker KeyRock, noted, institutions finally have the onshore tools to deploy familiar strategies: "With spot ETFs and U.S.-listed options, they’ve got a playbook that fits."

Why Are Traders Using Puts as a Volatility Buffer?

Greg Magadini, Amberdata’s derivatives director, spotted something unusual: even when Bitcoin isn’t rallying, the put-call skew in IBIT options suggests investors are increasingly using puts as downside protection. This Flow naturally dampens volatility and prevents panic selling—a far cry from Bitcoin’s early days of wild price swings. The data backs this up: U.S. trading hours now account for 57.3% of Bitcoin-dollar volume, up from 41.4% in 2021, and nearly half of all spot Bitcoin volume flows through the twelve U.S.-listed ETFs, per FalconX research.

Can Offshore Markets Keep Up With Wall Street’s Pace?

Deribit, the dominant offshore derivatives exchange, isn’t out of the picture yet, but IBIT is closing the gap fast. The two currently operate as isolated markets, with no unified collateral system to facilitate large cross-market trades. Le Shi, managing director at AUROS, believes stablecoins could eventually bridge this divide. Meanwhile, Coinbase’s $2.9 billion acquisition of Deribit in May hints at future integration. Deribit CEO Luuk Strijers confirmed talks to LINK platforms, which could enable shared collateral and reduce friction—but regulatory walls remain.

What’s Holding Back IBIT’s Next Growth Phase?

The current 25,000-contract position limit on IBIT options, designed to curb risk, is now stifling institutional strategies. CBOE Global Markets notes this cap keeps risk exposure far below levels possible with ETFs like MBTX or CBTX. Nasdaq petitioned the SEC in January to raise the limit tenfold; the agency has until September to respond. BlackRock’s digital assets head Robbie Mitchnick predicts "a non-trivial volume increase" if restrictions ease. Even with the cap, Wall Street isn’t slowing down. As Kevin de Patoul puts it: "Eventually, all assets will be digital—and what we call ‘crypto’ will just be part of the financial system, priced and hedged like everything else."

Data sources: CoinMarketCap, TradingView, Bloomberg.