Nasdaq Seeks to Quadruple Bitcoin ETF Options Limits

The proposal filed on November 21, 2025, represents the second time Nasdaq has requested an increase in IBIT’s options position limits, signaling accelerating institutional adoption of Bitcoin derivatives. According to the filing, the current 250,000 contract cap is “restrictive and hampers legitimate trading and hedging strategies” for institutional traders and market makers. Tim Sun, Senior Researcher at HashKey Group, told Decrypt that this move showcases how institutional demand for Bitcoin derivatives continues to expand as larger players seek to increase their Bitcoin allocations.

The exchange justified the quadrupling of limits by citing IBIT’s substantial scale and liquidity, including a market capitalization of $86.2 billion and average daily volume of 44.6 million shares as of September 22, 2025. These metrics place the Bitcoin ETF among the most substantial financial products in markets, warranting treatment comparable to major equities and ETFs such as Apple, NVIDIA, and the SPDR S&P 500 ETF. Eric Balchunas, Senior ETF Analyst at Bloomberg, noted that “IBIT is now the biggest bitcoin options market in the world by open interest,” underscoring the product’s maturation.

The proposed changes would enable institutional traders to establish significantly larger positions, thereby increasing market depth and liquidity. Lai Yuen, investment analyst at Fisher8 Capital, explained to Decrypt that “this will allow institutions to build more interesting structured products for IBIT, increasing the total possible amount of capital that can be allocated to the Bitcoin ETFs,” which should be “good for long-term IBIT flows.”

Notably, the filing requests complete elimination of position limits for customized ‘FLEX’ options that are physically delivered. This exemption would “align IBIT with other major commodity-based ETFs and help pull trading activity away from opaque over-the-counter markets,” according to the filing document. Jeff Park of Bitwise Invest Advisors celebrated the development, tweeting that “Institutional vol is finally here” as IBIT options receive “the treatment it deserves.”

Derek Lim, head of research at crypto market-making firm Caladan, provided context on the scale of the change, telling Decrypt that it’s “more modest than most headlines suggest.” With BlackRock holding over $71 billion in Bitcoin, the increased options limit would allow roughly $5.3 billion in exposure, representing about 8% of that total value—”a standard, conservative practice for large ETFs,” Lim added.

Analysts project significant market structure benefits from the proposed changes. According to Derek Lim, realized volatility is likely to compress 50 to 100 basis points over the next six to 18 months, which “can translate to marginally higher prices through lower risk premia.” This compression would represent a fundamental shift in Bitcoin’s trading characteristics, moving away from pure speculation toward allocation-driven behavior.

The HashKey analyst noted that while the changes have no immediate impact on Bitcoin’s short-term price, they would allow institutions to build Bitcoin positions in a “lower-risk and more controlled manner.” Lim pointed to Bitcoin’s rally from $70,000 to $110,000 earlier this year occurring amid declining volatility as evidence of this negative correlation trend. He suggested that if Nasdaq’s proposed changes take effect, Bitcoin will increasingly trade like a macro asset, accelerating this transition.

Concurrent with the options limit proposal, BlackRock continues expanding its Bitcoin exposure through internal funds. A separate filing revealed its Strategic Income Opportunities Portfolio increased IBIT holdings by 14% in Q3 to $155.8 million, demonstrating the asset manager’s ongoing commitment to cryptocurrency allocation. Bitcoin traded at $91,500 on Wednesday, up 5% over 24 hours according to CoinGecko data, as market participants await SEC approval of the proposed changes.