Nasdaq and NYSE have reportedly shelved their plans for Bitcoin ETF options, in a huge blow to investors looking for more accessible cryptocurrency trading.

This comes as both exchanges have withdrawn their applications that were intended to list and trade options based on Bitcoin ETFs. In a move that we can’t say is surprisingly what most people expected, it has sparked a debate about whether options trading in this space has taken off in the crypto community.

Regulatory obstacles

The regulatory landscape has remained relatively constant in terms of challenging crypto innovation. It took the industry nearly a decade of effort to get Bitcoin ETFs approved, and the road to options trading is still fraught with obstacles.

The US Securities and Exchange Commission has been very cautious, and the recent withdrawals by Nasdaq and NYSE only underscore the difficulties of the process. Industry players had previously estimated that options could come as early as late 2024, but recent events seem to indicate otherwise.

NASDAQ and NYSE have joined CBOE in withdrawing their applications to allow options trading on Bitcoin ETFs. I expect they will resubmit in the coming days or weeks, as we saw with CBOE. https://t.co/8trtqNBVTx photo.twitter.com/YC1U2SgAVA

—James Seyffart (@JSeyff) August 15, 2024

James Seyffart, a Bloomberg ETF analyst, is among the optimistic voices who thought options trading could begin soon. He claimed that the SEC had a deadline for decisions on several applications, including applications for options on Bitcoin ETFs.

But the fact that has emerged from the recent pullbacks following those announcements is that exchanges are becoming increasingly risk-averse in a still-developing regulatory environment. It represents a tinge of uncertainty coming into play for investors eyeing options as a trading strategy.

Market reactions

The market reacted cautiously but with some force to this news. Notably, the price of Bitcoin recently rose above the $70,000 level on earlier selling pressure attributed to ETF-related outflows.

Analysts have noted that this could impact trading dynamics, particularly Bitcoin’s price. According to investors and analysts, the recent surge in Bitcoin’s value, attributed to declining ETF outflows and a favorable macroeconomic environment, may ultimately not be good enough to maintain investor confidence if options trading does not resume.

Source: Farside Investors

Bitcoin ETF flows were positive on Thursday after net outflows the previous day, according to data from Farside Investors. Outflows from the Grayscale Bitcoin Trust slowed to $25 million, while Grayscale’s Bitcoin Mini Trust BTC was steady at $13.7 million after two days of flat flows.

According to Swan Bitcoin analysts, the SEC may be waiting to see more market stability before rolling out additional products. The analysts believe that the agency is cautious about the current Bitcoin price fluctuations, which can make options trading somewhat complex.

Looking ahead

Bitcoin ETF options have been developed, but their future is uncertain. Some have even said that the issue would be resolved by the end of 2024. On the other hand, it is thought that the regulation is much more complex than it initially seems and that a clearer guideline can be developed by 2025.

Main image from Pexels, chart from TradingView