In a shocking development, a nefarious network of hawala transactions and cryptocurrencies has been exposed in the Income Tax department's raids on major wedding planners in Jaipur. According to a report by the Economic Times, the officials have seized Rs 20 crore in cash and jewellery and frozen three crypto wallets.
The report said that the wedding planners under investigation converted payments received from their clients into cryptocurrencies. The officials have found that they were using hawala networks to transfer funds.
According to media reports, the Income Tax officials raided the premises of over 20 wedding planners in Jaipur. During the search operation, the Income Tax teams found secret crypto accounts of stablecoins and Bitcoin.
The NewsX report said that three crypto wallets were found. While two were linked to local platforms, one was operated by an international network, the report added. The undocumented cash was routed through a hawala network and converted into cryptocurrency, officials found.
Once the cash was converted into crypto, the funds were moved to international platforms. The report said that despite strict KYC norms, the accused found loopholes to bypass the network and transfer funds.
In January, cryptocurrency enthusiasts celebrated a milestone when the Security and Exchange Commission (SEC) approved the buying and selling of spot Bitcoin exchange-traded funds (ETFs). With that, it was only a matter of time before U.S. regulators approved trading of derivatives of those funds.
And so it happened: In November, market participants were able to trade options on spot Bitcoin ETFs from companies like BlackRock, Fidelity, and ARK Invest. Thus, a variety of options strategies, from covered calls to protective puts, suddenly became available to a variety of Bitcoin-tracking funds.
Binance CEO Richard Tang commented on the impact of options trading on crypto markets, “Options trading is poised to increase liquidity in the crypto ecosystem by providing investors with additional tools for hedging and speculation. Institutional players, who often seek sophisticated risk-management tools, may find options particularly attractive. By offering new methods to manage exposure, options trading can attract long-term capital, increase market stability, and broaden participation beyond retail investors.”
Having more trading options is exciting, sometimes even useful, but it does not guarantee a successful outcome or a positive initial response from the markets. However, it turns out that these newly available derivatives are largely a welcome addition to the arsenal of today’s sophisticated Bitcoin and Bitcoin-related traders.
A banger
The ability to trade bitcoin on exchanges like Binance, and then an ETF that tracks bitcoin’s price action, represents a significant step toward cryptocurrency adoption for both retail investors and institutions. However, it has raised questions about whether traders will queue up to try the associated options.
The floodgates opened on Tuesday, November 18, when options trading began on the iShares Bitcoin Trust ETF (NASDAQ:IBIT). So, just as BlackRock Funds kicked off a tidal wave of spot bitcoin ETF trading in January, the same fund’s derivatives have opened a veritable Pandora’s Box of cryptocurrency derivatives trading.
It’s no exaggeration to claim a blockbuster hit with this group of options, at least initially. According to a report by The Wall Street Journal, nearly $19 billion worth of the iShares Bitcoin Trust ETF changed hands on its first day of being available for purchase and sale. That’s just for calls and puts from the BlackRock fund, and doesn’t include options on funds from Fidelity and ARK Invest that became available around the same time.
Looking at the volume figures from another angle, there were roughly 354,000 IBIT options contracts traded that first day, broken down into about 289,000 call options and 65,000 put options. This suggests that, at the time, sentiment about future Bitcoin prices was largely bullish.
Bloomberg’s ETF analysts called the figures “unheard of for a first day,” but there could still be room for improvement. For comparison, on November 18, $5 billion worth of SPDR Gold Shares ETF (NYSEARCA:GLD) options were traded.
Marking a “watershed moment”
Critics will undoubtedly consider Bitcoin ETF options to be too risky a derivative of an already volatile asset. Yet, advocates have responded with open arms because these options offer certain advantages, sometimes even in reducing the risk associated with cryptocurrency volatility.
To that end, Valentin Fournier, principal analyst at BRN, called the launch of options trading on BlackRock’s spot Bitcoin ETF a “watershed moment.” Fournier asserts that the ability to trade these derivatives “provides institutions with sophisticated tools for hedging and speculative strategies, which are key to sustaining Bitcoin’s upward trajectory.”
Along with potentially boosting Bitcoin’s price, these options could help populate the crypto space in a meaningful way, Fournier suggests. “Liquidity is the lifeblood of any mature asset class, and these options are injecting just that into the market,” the BRN analyst explains.
Indeed, more liquidity could help calm Bitcoin’s volatility. This, in turn, could contribute to a more favorable market response to options, while also encouraging broader Bitcoin adoption rates — ambitious hopes, perhaps, but it’s worth considering whether Fournier’s bullish thesis holds up.
So far, so good
Checking in shortly after the big launch, Chain Catcher reported that, as of December 6, “the nominal total trading volume of US Bitcoin spot ETF options had reached $1.21 billion.” Apparently it’s mostly call options rather than put options as the “nominal total trading long-short ratio” for these options was 2.04 (almost twice as many long bets on Bitcoin as short bets).
Long tilt or not, there is clearly continued interest in options on the spot Bitcoin ETF. While it’s too early for proponents to declare victory, the numbers suggest that the option buying phenomenon is more than just a flash in the pan.
Trading volume in 2025 will help viewers gauge the continued interest in these options, but there’s a bigger picture beyond the trades. There will be detractors at every turn, no doubt, but it’s undeniable that the launch of Bitcoin ETF options will have ripple effects that will touch countless traders across multiple asset classes.
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