Bitcoin betting options expand on Wall Street.

• In January, the trading of spot bitcoin ETFs commenced, allowing for greater access to mainstream investors.
• CBOE Global Markets is set to list its first cash-settled bitcoin ETF options on Dec. 2, while options on spot crypto products on the Nasdaq and NYSE have already started trading.
• By implementing a new margin framework around bitcoin, investors will have the opportunity to increase their exposure to the asset class compared to the amount of cash they're currently investing.

For years, won by being boring.

Despite being unable to do much with it, the world's largest cryptocurrency was valuable because it could only be bought and held.

Bitcoin was a basic commodity, similar to gold or corn, with a limited range of offerings. The core team of developers behind Bitcoin has deliberately moved at a slow pace when it comes to making changes to the base blockchain in order to avoid breaking things. As a result, many of the more adventurous coders in the crypto space have turned to other blockchains where they can experiment with building decentralized applications.

Bitcoin's success as the world's largest cryptocurrency by market cap can be attributed to its robust and reliable network, as well as its status as the original coin. Despite numerous reported hacks, bitcoin remained volatile but maintained its position due to a major system upgrade that took four years to design and green light.

But times are changing for the original coin.

Bitcoin's base blockchain is being utilized by developers in innovative ways, while Wall Street is adorning the coin with familiar features such as exchange-traded fund (ETF) wrappers and enabling traders to hedge positions and make leveraged bets.

In January, spot bitcoin ETFs started trading, allowing more mainstream investors to enter the market. Last week, options on those spot crypto products became available on the Nasdaq and New York Stock Exchange. CBOE Global Markets is set to list its first cash-settled bitcoin ETF options on December 2.

By introducing a new margin framework for bitcoin, both retail traders and institutions will have the opportunity to increase their exposure to the asset class compared to the amount of cash they invest.

New ways to bet on bitcoin

The total assets under management of U.S.-issued spot bitcoin funds surpass $100 billion. Last week, these funds experienced their largest weekly inflows ever, with a total of $3.1 billion. Additionally, CoinShares reports that year-to-date net flows for bitcoin funds have reached $37 billion, compared to the $309 million drawn by U.S. Gold ETFs in their first year.

In September, when U.S. interest rates were cut for the first time in four years, nearly half of the bitcoin product flows took place.

According to Vetle Lunde, head of research at K33 Research, there has been a record high open interest for futures on the CME derivatives exchange, which is the most common way U.S. institutions buy bitcoin futures contracts. However, many traders have been waiting for options on spot bitcoin ETFs on major exchanges like the NYSE and Nasdaq, as they provide greater liquidity and hedging tools.

The demand for leveraged long exposure to bitcoin and ether is increasing, as evidenced by VolatilityShares' BTC exposure reaching new all-time highs, according to Lunde from K33 Research.

According to CNBC, Galaxy Digital's trading team has reported significant volume in BlackRock's IBIT ETF options, which was the first to launch on the Nasdaq last week. BlackRock is the world's largest digital asset manager after surpassing Grayscale in August. BlackRock's bitcoin trust IBIT holds $48.4 billion in bitcoin, compared to the $34 billion in its gold trust.

On its first day, IBIT had a successful debut with 353,716 contracts traded, surpassing the previous record of 360,000 contracts exchanged during the launch of Facebook options in 2012, according to Galaxy Digital.

The crypto industry has seen a surge in trading activity, with the market extending out to January 2027, around the halfway point of Donald Trump's presidency. On the campaign trail, Trump had a change of heart on bitcoin and made grand promises to the crypto industry. Since Election Day, the price of bitcoin has increased by approximately 40%.

The ETF's long-term growth potential has been confirmed by the level of concentrated, long-dated activity, indicating bullish sentiment for the years ahead, according to Galaxy's trading team.

Derivatives trading for bitcoin has primarily taken place on offshore crypto native platforms such as Binance and Deribit. However, according to Galaxy, there is a noticeable difference in volatility premiums between Deribit, CME, and IBIT, which could potentially create arbitrage opportunities among the various platforms that offer derivatives trading.

On Friday, the expiration of more than $9 billion in bitcoin options contracts on Deribit could result in increased price volatility as the deadline nears.

On Friday, CNBC's "Squawk Box" reported that Mike Novogratz, CEO of Galaxy Digital and a seasoned crypto investor, stated that there is a significant amount of leverage in the system at present.

"Are you considering the funding rates for crypto in our market? The perpetual market has been high, but the basis is also high," said Novogratz. "The crypto community is highly leveraged, so there will be a correction."

On Friday, Bitcoin was close to reaching $100,000 but pulled back over the weekend. Currently, the cryptocurrency is trading at approximately $95,000.