Bitcoin volatility could explode in April as SEC reviews the market behind ETF leverage

The US Securities and Exchange Commission (SEC) is holding a public roundtable on April 16 to review the listed options market structure, focusing on competition, customer experience, and growth. This review is critical because Bitcoin ETF options, like those for IBIT, are now integrated into this regulated, centrally cleared infrastructure. Changes to market structure elements like spreads and routing can alter leverage costs, thereby changing volatility patterns. The article highlights that increased position limits for Bitcoin ETF options (e.g., IBIT) create significant dealer hedging demand that flows back into the underlying ETF shares and, consequently, the spot Bitcoin market. The SEC's decision could lead to three scenarios: pro-competition reforms that tighten spreads and increase activity; guardrails that slow growth for retail protection; or structural evolution where Bitcoin gradually exhibits more equity-derivatives-like behavior. While the roundtable won't yield immediate rules, market expectations are already shifting, suggesting that how the SEC optimizes this infrastructure will influence whether Bitcoin's volatility regime aligns more closely with traditional equity derivatives.

(Source：CryptoSlate)