Nasdaq seeks SEC approval to launch Bitcoin index options

Nasdaq, the American stock exchange, is seeking approval from U.S. regulators to launch Bitcoin (CRYPTO:BTC) index options, providing institutional investors and traders with new tools to hedge risks and amplify their buying power.

The proposed Bitcoin Index Options would be based on the CME CF Bitcoin Real-Time Index, which tracks Bitcoin futures and options contracts on CME Group’s exchange platform.

The move by Nasdaq highlights the growing interest in Bitcoin among institutional investors, who are looking for more sophisticated financial instruments to manage their exposure to the volatile cryptocurrency market. 

Matt Hougan, Bitwise’s chief investment officer, emphasised the importance of having options available for Bitcoin to fully normalise the asset class. 

He noted that there is a missing piece in the liquidity picture, which could be filled by exchange-traded fund (ETF) options.

Options are financial derivatives that give traders the right to buy or sell assets like stocks, indexes, or ETFs at a predetermined price on a specified date. 

These instruments allow institutions to hedge against potential losses and enable traders to leverage their positions, increasing potential returns.

Nasdaq's proposed Bitcoin Index Options would represent a significant step forward in the maturation of the cryptocurrency market. 

However, the U.S. Securities and Exchange Commission (SEC) has yet to approve any options investment instruments linked to spot Bitcoin ETFs. 

This includes Nasdaq’s application to trade options on the iShares Bitcoin Trust (IBIT) ETF, managed by BlackRock.

The announcement comes as BlackRock’s spot Bitcoin ETF, IBIT, recorded its largest daily net inflow in 35 days, with $224.1 million added on August 26.

This influx suggests that investors are taking advantage of a slight dip in Bitcoin’s price following a recent rally.

The inflows into BlackRock’s ETF also contributed to a combined daily net inflow of $202.6 million across 10 U.S. spot Bitcoin ETFs, while funds from other issuers like Bitwise, Fidelity, and VanEck experienced a net outflow of $32.1 million.

Meanwhile, crypto investment products overall saw their largest inflows in five weeks, with $533 million added between August 18 and 24, according to CoinShares.

The increasing interest in such products reflects a growing confidence in the long-term potential of digital assets, even as market volatility persists.

At the time of writing, the Bitcoin price was $59,045.46.