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- [00:00]
A
You're listening to a brief segment from one of the Bits and BIPS episodes this week. The full show is now only available on its own dedicated Bits and Bits channels, so be sure to go to X YouTube and your favorite podcast platform and search for bits +bits spelled B I P S and subscribe
- [00:21]
B
we were just talking about your beave of index, but one thing I find really interesting is that you have one specifically related to options on iBIT, which should have very little delta vis a vis Bitcoin itself, but nature of financial products it does. I'm just curious, before we get into a couple of other assets, is there any interesting divergence between your IBIT product and BE viv? And if so, what might that mean?
- [00:50]
C
So we have the BVIV index, as you mentioned, and the BVIV US Index. The BVIV index tracks the global spot options market deribit okx. It looks at these type of venues and kind of aggregates this single number that looks at the entire global options market. About six months ago. So BVIV is about four or four years old now. About six months ago we rolled out the BVIV US Index on the back of the success for the IBIT options. And IBIT options launched at the end of 2024 in November and have quickly become the dominant form factor for Bitcoin options in the US market. And so the regulated ETF options market and the offshore market are roughly the same size. They're both about 25 billion on any given day recently. And basically you can observe that the BEV index is a couple points below the BVIV US Index. This is largely attributed to a small premium for really transparency and the clearinghouse setup of the equity options exchanges in the US market. You'll think BVIV US is at 42 and BVIV's at 39, something like this. And so there is a small premium on the IBIT index, but largely the performance of the indices is very, very similar. And it's something that we pay close attention to. We've published a lot of research on the growth of the IBIT options market and something we're tracking closely. It's very interesting to juxtapose the two markets and two indices.
- [02:34]
B
Okay. And we spent a lot of time talking about Bitcoin, but as you mentioned in some of your earlier remarks, for every, every token has something at stake with the clarity negotiations. But I guess one could probably argue Bitcoin has the least, given that it's pretty settled as a, as a commodity and Just sort of by design, its rigid nature. There's, there's less like on chain activity you can do with Bitcoin beyond just sending it back and forth. I want to kind of get your sense of what's happening with eth, Solana, some of the other major ones where I mean aside from just perhaps getting a little bit of clarity on which regulator has primacy, there's a lot at stake in particular for Defi and some of the sort of activities that you can do on top of these multipurpose blockchains. So are traders positioning themselves differently related to these, for these tokens related to Bitcoin? What does your platform tell you
- [03:32]
C
in general? I think that, you know, Bitcoin is bona fide and clearly under the CFTC's remit based on previous administrations and the sort of regulatory seats and sort of things that they've said. And so Bitcoin is very clearly a commodity. I think ETH is also very similar in that regard. But a lot of the things that are built on top of Ethereum and Solana stand to benefit and maybe things like Hyper Liquid and Lighter and others stand to benefit from the Clarity act and the increase clarity in the ecosystem. I think that, you know, it's, it's nebulous, you know, how certain things are regulated, you know, what is, you know, security, what is a broker. And the Clarity act brings transparency and clarity to those, those areas. And so I do think that, you know, Ethereum and Solana ecosystems, Hyper Liquid have a lot to gain from this act, the statute going through and you know, it's very interesting to see how the market will react to that. I mean you've seen in recent days that on a seven day time frame, Ethereum is up almost a percent and Bitcoin is, is roughly up half a percent. And so this might be indicative of the fact that, you know, Ethereum and, and, and other smart contract platforms as well as other, you know, decentralized applications and exchanges have a lot to gain from the Clarity act going through. So you, you might see this in the, in the EVIV index. If I, if I look real quick, the EVIV index is up, you know, you know, around the same amount of percentage points and, and you know, as bviv, but you can definitely see this in the Ethereum price and the, the sole price and the hype price. So it's going to be interesting to see how, you know, the broader market reacts to, you know, clarity going through and the prospect of it going through.
- [05:30]
B
What, what is the longest term Duration of, of contracts that your index tracks,
- [05:37]
C
it is 180 days. We should roll out a 360. That would be cool.
- [05:41]
B
Okay. All right. So, I mean, that pretty much gets us to the end of the year, which is where I, I kind of wanted to take this next. I, I was looking a little bit at oil futures before we went on, and again, it's a very, I say this, I feel like I say this a lot on the show, but there's many different ways to look at the world. I mean, for one, rates are hiking across like two years, 10 years. Bonds are suffering. Bonds are suffering. Traders are anticipating rate hikes across the world over fears that the Iran conflict, which is now I guess, moved from the straight up from Moose into also the Red Sea. And what all that means. People are bracing for a rough couple of months, but oil futures tied towards the end of the year are actually relatively muted and not too far up from where they sit today. And I'm wondering what crypto's telling you the end of the year, like, do we see a big run up into 100k? And I know you don't look at particular price, but like, are they expect our crypto? Are your models predicting a lot of volatility between now and the, and the end of the year? I would anticipate, given that we've been in a crypto winner and hopefully it's bottomed out, that if there is a lot of volatility, that would mean volatility to the upside, not the downside.
- [07:09]
C
When I look at the term structure for bviv, I don't observe anything that jumps out to me as elevation in the term structure, as you might see with the clarity in the next couple of weeks. Although definitely I think that by end of the year, crypto could look a lot different. Like I mentioned, there's a strong institutional appetite for tokenization, blockchain as infrastructure, stablecoins right now. And then that could translate back into, you know, the, the liquid majors, salana, ethereum, bitcoin. And so I think it's, you know, it's a very interesting, you know, regime we're in right now, very institutional regime. And I think that the market could look a lot different by end of the year. There's definitely a lot of appetite for, you know, institutional pilots and everything right now. And nothing jumps out in the actual term structure for the BVIV index. But I know I've got feeling, I think that the market could shape up a lot.
- [08:07]
A
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