Bitcoin Market Faces Heightened Volatility as SEC Approves Bitcoin ETF Options for Retail Speculation

On October 23, the U.S. SEC made a significant move by approving options trading for multiple Bitcoin spot ETFs, a decision that has raised concerns among analysts regarding potential increases in market volatility. Kbit CEO Ed Tolson suggests that the introduction of Bitcoin ETF options may attract retail investors to engage in speculative trading, which could lead to heightened price fluctuations. “The primary application for BlackRock‘s IBIT options will likely come from retail speculation, with institutional market makers participating as counterparts,” he stated, underscoring the likely purchase of options during price surges and subsequent sales during downturns. Additionally, Michael Harvey, a trading director at Galaxy Digital, anticipates that the influx of retail traders will surpass that of institutional players in the short term, leading to increased volatility. However, he notes that as institutions develop income-generating strategies, such as volatility trading, overall fluctuations may stabilize over time.