• Nasdaq proposes raising BlackRock Bitcoin ETF options limit from 250,000 to 1 million contracts.
• Increased limit aims to improve liquidity, enable larger trades, and support effective hedging strategies.
• Experts view the move as a sign of Bitcoin’s growing legitimacy and institutional market development.

The Nasdaq International Securities Exchange has submitted a proposal to the U.S. Securities and Exchange Commission (SEC) regarding an increase in the level of positions allowed for options contracts on BlackRock’s iShares Bitcoin Trust (IBIT) ETF from 250,000 contracts to 1 million contracts.

This is a measure aimed at ensuring an investor is not allowed control over too much of an asset in terms of options contracts. With regard to the filing of Nasdaq, dated November 13, one significant factor mentioned is the increased demand for the IBIT ETF.

Moreover, because of the existing lower limit, some form of market activity may be hampered because the strategy of hedging may be rendered ineffective, especially with regard to income creation.

“These changes are just routine once an asset is deemed able to handle a genuine volume of trades,” stated Vincent Liu, the CIO of Kronos Research, adding he believes the proposal will pass approval with the SEC. “An increase in IBIT options is a plus for liquidity. Investors can execute a big block of stock with little resistance, leading to increased books and smoother market flow,” he explained.

Nasdaq Raises IBIT ETF Limits

This is actually the second instance when Nasdaq has increased the limit on the IBIT ETF since January, when it hiked it from 25,000 contracts to 250,000 contracts due to increased levels of activity above the required 100 million level of shares being transacted within the exchange.

But according to Liu, the increased limit is an indicator showing that Bitcoin markets are indeed developing. “The increased limits enable large investors to hedge and increase positions, facilitating better price discovery,” he explained.

Experts further argue that increased levels may trigger short-term fluctuations because of better agility in managing risks, which can ultimately smooth out transactions in the markets and enhance all features related to liquidity for better functioning of the markets.

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Nasdaq Elevates BlackRock Bitcoin ETF

Adam Livingston, a Bitcoin analyst, said that this decision by Nasdaq categorizes BlackRock’s Bitcoin ETF with large and very liquid stocks, such as those of Apple and Microsoft. “This is when traditional finance has always treaded with care, the view of Bitcoin evolving full-fledged into a legitimate asset class with institutional options liquidity,” he said. “You don’t multiply your limits by forty unless you think demand is about to rocket,” Livingston added.

The new proposed increase in the options available in IBIT is reflective of the acceptance of Bitcoin within mainstream financial markets and the growth of institutional-level infrastructure within crypto assets for trading.

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