Nasdaq Moves to Lift Options Limits on Bitcoin and Ethereum ETFs

Key Highlights

Nasdaq asked the SEC to remove special options trading limits on Bitcoin and Ethereum ETFs, including BlackRock’s IBIT and ETHA.
If approved, crypto ETFs will follow standard options rules, like other ETFs, and the change could take effect immediately.
BlackRock and other institutions continue to expand crypto holdings even as some ETFs see large outflows.

Nasdaq has filed a proposal with the US Securities and Exchange Commission (SEC) seeking approval to remove existing options trading restrictions on several Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs).

The request, filed on January 21, focuses on changing Nasdaq’s rules for how many options contracts traders can hold or exercise on these crypto-linked ETFs.

Nasdaq’s proposal for crypto ETF options

According to the SEC notice, Nasdaq wants to remove the current cap of 25,000 contracts that applies to options trading on Bitcoin and Ethereum ETFs. If approved, these ETF options will no longer have special limits just because they are linked to crypto. Instead, they will follow the same rules used for options trading on other exchange-traded funds listed on Nasdaq.

The proposal will affect options tied to BlackRock’s iShares Bitcoin Trust ETF (IBIT) and BlackRock’s Ethereum ETF (ETHA). It will also raise options limits for ETFs issued by Grayscale, Bitwise, Fidelity, ARK 21Shares, and VanEck. Nasdaq stated in the filing that the change would ensure consistent treatment across ETF options and improve how these products trade on the exchange.

Nasdaq said the proposal supports “just and equitable principles of trade,” prevents unfair discrimination, and helps maintain a free and open market. The exchange added that the rule change places no significant burden on competition and protects investors and continued that similar adjustments are expected to be adopted by other options exchanges.

The exchange also asked the SEC to waive the usual 30-day waiting period, allowing the rule to become effective without delay. The SEC has confirmed it is reviewing the proposal and is now asking the public to share comments. A final decision is expected before the end of February.

ETFs’ performance in recent days

BlackRock’s Bitcoin ETF has been seeing a surge in activity in the past few weeks. According to OpenCharts, the ETH has bagged 11th among US-listed assets with the highest options open interest, with more than 5.3 million open contracts. However, these options still rank below gold and silver ETFs, as many large investors move away from assets with high risk like Bitcoin.This shift has been reflected in the drop of the Bitcoin ETF. In the last three days, Bitcoin ETFs recorded a total outflow of about $1.48 billion, according to Farside Investor. BlackRock’s IBIT led the withdrawals with $356.6 million, while Fidelity’s FBTC followed with $287.7 million in redemptions.

Bitcoin ETF Outflow in the last 3 days | Source: Farside

Bitcoin is currently trading for $89,030, just a modest 0.77% drop from the previous day but a 7% drop in the last week, while Ethereum trades below $3,000 after a sharp drop earlier in the week, according to CoinMarketCap.

In a statement shared with CryptoTimes, analysts from Bitfinex said that this recent Bitcoin drop below $90,000 is based on aggressive selling linked to geopolitical tensions and the U.S.-Greenland issue, but whale-sized spot buying has been actively buying the dip, which still supports the price.

The analysts added that although the demand for ETFs has dropped since the end of last year, inflows from exchanges are still low compared to big sell-offs, and also, long-term holders are starting to sell less.

“From here, the focus is on stabilization signals: ETF flows flattening or turning positive, spot taker CVD staying net positive, and price reclaiming the $90K–$92K zone with declining volatility. If those don’t align, this move looks like redistribution instead of the previously assumed consolidation before an uptrend,” the analysts said.