Nasdaq’s removal of position limits on spot Bitcoin and Ethereum ETF options is considered a significant milestone in the crypto derivatives market. This change, which went into effect with SEC expedited approval in January 2026, completely eliminated the previously applied 25,000 contract limit. These options are now subject to the same standard rules as traditional commodity-based products such as gold, oil, or large equity ETFs.
The main effects of removing position limits are:
1. Increased institutional investor participation
Large hedge funds, asset managers, and market makers can now hold significantly larger positions in a single account. Previously, the 25,000 contract limit made it difficult to implement capital-intensive strategies (e.g., large-scale hedging, writing covered calls, or complex spread positions). With the limit removed, institutional players can more effectively hedge their Bitcoin and Ethereum exposure or take speculative positions.
2. Increased Market Liquidity and Depth
Allowing larger positions increases trading volume and open interest in the options market. It makes it easier for market makers to provide liquidity with wider spreads, which generally lowers trading costs and improves price discovery. Some analyses suggest this change will further increase the already high open interest in Bitcoin options (reaching billions of dollars by mid-2026).
3. Accelerated Integration of Crypto Assets into the Mainstream Financial System
Bringing crypto ETF options to the same level as traditional commodity ETFs is a sign that regulators see the crypto market as mature and sufficiently protected against manipulation. This encourages conservative institutions such as pension funds and endowments to take a more relaxed approach to crypto derivatives.
4. Potential Risks and Oversight
Position limits were put in place to mitigate the risk of market manipulation, cornering, or excessive speculation. Removing the limit could theoretically increase these risks; however, Nasdaq and the SEC argue that these concerns are manageable thanks to existing oversight mechanisms, the ETF creation/redemption process, and high liquidity. The SEC retains the authority to suspend the rule within 60 days, and public comment continues.
Ultimately, this step makes the crypto derivatives markets more mature, liquid, and institutionally focused. In the short term, it supports an increase in options volume, and in the long term, it supports Bitcoin and Ethereum becoming a more integrated asset class with traditional financial instruments. Market participants believe this change will act as a catalyst for the growth of options trading throughout 2026.
#ETF
$BTC $ETH
The main effects of removing position limits are:
1. Increased institutional investor participation
Large hedge funds, asset managers, and market makers can now hold significantly larger positions in a single account. Previously, the 25,000 contract limit made it difficult to implement capital-intensive strategies (e.g., large-scale hedging, writing covered calls, or complex spread positions). With the limit removed, institutional players can more effectively hedge their Bitcoin and Ethereum exposure or take speculative positions.
2. Increased Market Liquidity and Depth
Allowing larger positions increases trading volume and open interest in the options market. It makes it easier for market makers to provide liquidity with wider spreads, which generally lowers trading costs and improves price discovery. Some analyses suggest this change will further increase the already high open interest in Bitcoin options (reaching billions of dollars by mid-2026).
3. Accelerated Integration of Crypto Assets into the Mainstream Financial System
Bringing crypto ETF options to the same level as traditional commodity ETFs is a sign that regulators see the crypto market as mature and sufficiently protected against manipulation. This encourages conservative institutions such as pension funds and endowments to take a more relaxed approach to crypto derivatives.
4. Potential Risks and Oversight
Position limits were put in place to mitigate the risk of market manipulation, cornering, or excessive speculation. Removing the limit could theoretically increase these risks; however, Nasdaq and the SEC argue that these concerns are manageable thanks to existing oversight mechanisms, the ETF creation/redemption process, and high liquidity. The SEC retains the authority to suspend the rule within 60 days, and public comment continues.
Ultimately, this step makes the crypto derivatives markets more mature, liquid, and institutionally focused. In the short term, it supports an increase in options volume, and in the long term, it supports Bitcoin and Ethereum becoming a more integrated asset class with traditional financial instruments. Market participants believe this change will act as a catalyst for the growth of options trading throughout 2026.
#ETF
$BTC $ETH
