

As explained by Park, money is supposed to create a tradeoff between price and quantity. Central banks manipulate the money supply in order to ensure price stability
Head of Alpha Strategies at Bitwise Asset Management Jeff Park believes that the approval of options for Bitcoin exchange-traded funds will not reduce the volatility of the underlying cryptocurrency.
According to Park, there is a tradeoff between price and quantity when it comes to money. Central banks manipulate the money supply to ensure price stability, while Bitcoin's total supply is hard-capped at 21 million coins. However, its holders must give up the guarantee of price, which results in high levels of volatility.
The SEC approved the trading of options for BlackRock's record-shattering iShares Bitcoin Trust (IBIT) on Friday. The product allows for greater exposure to the leading cryptocurrency.
Park discussed the implications of the approval of Bitcoin ETF options on Saturday, calling them "the most massive development for crypto markets." This is because it marks the first time that the financial world has regulated leverage on a perpetual supply-constrained commodity.
According to Park, Bitcoin's synthetic notional exposure will now be able to grow exponentially, which will increase the financial utility of ETFs.
Options traders will also be able to capture more delta while paying the same premium, giving them "more bang for their buck."
Bitcoin's implied volatility tends to increase with its spot price, which gives it a negative Vanna. A gamma squeeze usually leads to an explosive price rally.
Prominent on-chain analyst Willy Woo has argued that the introduction of synthetic exposure meant that the supply was no longer constrained. He said that dollar holders could now sell Bitcoin thanks to derivatives.
However, Park does not agree with this assessment. "Options don’t create fake supply, it just helps accelerate the steady-state destination of Bitcoins neutral price faster, which is higher," he wrote in a social media post.
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