The U.S. Securities and Exchange Commission (SEC) has waived its standard 30-day waiting period, allowing Nasdaq to immediately remove position limits on options tied to spot Bitcoin and Ethereum exchange-traded funds (ETFs). The prior cap of 25,000 contracts per options class is no longer in force, though the SEC retains authority to suspend the rule within 60 days under its oversight process.
Position limits, which restrict the number of options contracts a market participant can control across expiries, are used by exchanges and regulators to mitigate concentration and manipulation risks. The change aligns the treatment of crypto ETF options with that of commodity-based ETF options.
The removal of caps is expected to enhance market liquidity and institutional access. Market makers can now warehouse larger inventories and quote tighter spreads, potentially supporting deeper order books and the execution of block trades. ETFs such as BlackRock’s iShares Bitcoin Trust (IBIT) are among the products most directly affected, allowing larger institutions to construct delta-hedged exposures and manage creation/redemption risk more efficiently. Analysts, including Bloomberg's senior ETF analyst Eric Balchunas, argued the previous thresholds were restrictive for larger participants, especially during volatile periods.
Expanded capacity could also enable more sophisticated trading strategies like collars, cash-secured puts, or covered calls on ETF shares. However, the change raises concentration concerns if a small number of firms accumulate outsized exposures, which could amplify stress during sharp price moves. Strong venue-level surveillance, risk monitoring, and margin controls are cited as key mitigants.
Concurrently, recent Bitcoin volatility has revealed a divergence between retail and institutional behavior. Data from CryptoQuant shows two major waves of retail selling on Binance in February, with over 28,000 BTC sold on February 6 and more than 12,000 BTC sold on February 13, even as the Bitcoin Short-Term Holder MVRV fell to 0.72—its lowest since May 2022, signaling capitulation.
In contrast, spot Bitcoin ETFs recorded their first positive net inflow day since January on February 6, signaling renewed institutional demand. BlackRock’s IBIT led with over $4.8 billion in net additions, followed by Fidelity’s FBTC with approximately $1.31 billion. This institutional buying is seen as providing structural support by absorbing exchange sell pressure.
