Basis trading is a market-neutral strategy that profits from the price gap between spot Bitcoin and its futures contracts. It is the reason hedge funds hold billions in Bitcoin ETFs without betting on the price going up.

The most widely repeated misunderstanding about Bitcoin ETF inflows is that they represent bullish bets on the price. Many of them do. But a significant share of the billions flowing into spot Bitcoin ETFs comes from hedge funds and trading firms that are completely indifferent to whether Bitcoin goes up or down. They are running basis trades, and the only number they care about is the spread between spot and futures.

This guide explains how the trade works mechanically, why crypto markets offer higher basis yields than traditional commodities, what risks the strategy carries, and how to evaluate whether the current basis is worth capturing. Understanding the basis trade is also essential for interpreting ETF flow data, futures open interest, and funding rate charts, because each of these metrics is heavily influenced by basis trading activity that is often misread as directional conviction.

How the basis trade works step by step

The mechanics are straightforward once the terminology is clear. A basis trade requires two simultaneous positions: a long position in the spot market and a short position in the futures market for the same asset and the same notional amount.

Step one: the trader buys $1 million worth of Bitcoin at the current spot price. In the ETF era, this typically means purchasing shares of a spot Bitcoin ETF such as BlackRock IBIT or Fidelity FBTC, which track Bitcoin’s price through direct holdings of the asset. The spot ETF creation and redemption mechanism ensures that ETF shares trade close to the net asset value of the underlying Bitcoin.

Step two: the trader simultaneously sells $1 million worth of Bitcoin futures on a regulated exchange, most commonly the CME. The futures contract will expire on a set date, typically monthly or quarterly.

Step three: the trader holds both positions until the futures contract expires. At expiration, the futures price converges with the spot price by definition, because the contract settles against the actual spot price. The difference between the price at which the futures were sold and the price at which they converge is the trader’s profit.

If Bitcoin was trading at $100,000 spot and the one-month futures contract was trading at $101,500, the basis is $1,500 or 1.5% for one month. Annualized, that is approximately 18%. The trader collects that 1.5% regardless of whether Bitcoin finishes the month at $80,000 or $120,000, because the gains on one leg offset the losses on the other.

Why crypto basis is higher than traditional markets

In traditional commodity markets, the basis on oil, gold, or agricultural futures typically runs between 1% and 5% annualized. In crypto markets, the annualized basis has historically ranged from 5% to more than 25%, with spikes above 40% during periods of extreme bullish sentiment. During the bull run of late 2024 and early 2025, the CME Bitcoin front-month basis routinely exceeded 15% annualized, a yield that no comparable fixed-income instrument could match at the time.

The reason is structural. Crypto futures markets are dominated by leveraged speculators who want long exposure without holding the underlying asset. This persistent demand for long futures pushes the futures price above the spot price, creating what traders call contango. The steeper the contango, the wider the basis, and the more profitable the cash-and-carry trade becomes.

Three factors keep crypto basis elevated compared to traditional markets. First, crypto markets trade around the clock every day of the year, which means funding costs and leverage demand never pause. The New York Mercantile Exchange closes on weekends. Binance and Bybit do not. Continuous trading means continuous demand for leverage, which translates to a persistently elevated premium on futures.

Second, the margining requirements on crypto futures are higher than on traditional commodity futures, which means the cost of maintaining leveraged positions is higher, and that cost gets priced into the futures premium. CME Bitcoin futures require initial margin around 40%, compared to roughly 5% to 10% for crude oil or gold. The higher the margin requirement, the more capital a leveraged long must deploy, and the more premium they are willing to accept.

Third, retail participation in crypto futures is proportionally larger than in traditional markets, and retail traders tend to be net long and willing to pay higher premiums for leveraged upside. On offshore exchanges, it is common to see 50x or 100x leverage on Bitcoin perpetual contracts. These highly leveraged longs create enormous demand for the other side of the trade, and the basis is the price the market pays to satisfy that demand.

The perpetual futures funding rate is a related concept. Perpetual contracts do not expire, so there is no natural convergence date. Instead, exchanges use a funding rate mechanism where longs pay shorts (or vice versa) every eight hours to keep the perp price anchored to spot. When funding rates are positive and elevated, it signals the same demand imbalance that drives the basis on dated futures. During sustained bull markets, cumulative funding payments can exceed 30% annualized, making the perp funding trade even more lucrative than the dated futures version.

The ETF basis trade: how institutions do it

Before spot Bitcoin ETFs launched in January 2024, running a basis trade required holding actual Bitcoin on an exchange or with a custodian. This introduced counterparty risk, custody complexity, and regulatory ambiguity that kept most institutional capital away.

The ETF changed the calculation entirely. A hedge fund can now buy IBIT shares through a prime broker, short CME Bitcoin futures through the same prime broker, and report both positions on a single balance sheet with no direct crypto custody. The trade settles in dollars, clears through regulated infrastructure, and fits within existing risk frameworks.

SEC 13F filings have revealed the scale of this activity. Millennium Management, Citadel, Point72, and dozens of other multi-strategy hedge funds disclosed large IBIT positions alongside corresponding CME futures shorts. These are not Bitcoin bulls. They are arbitrageurs harvesting the basis, and their ETF flow activity creates the paradox of billions in ETF inflows that carry zero directional conviction.

The institutional version of the trade typically targets annualized returns of 8% to 15% with minimal drawdown risk. For a fund that can borrow at 5%, a 12% annualized basis produces 7% of alpha on what is effectively a market-neutral position. At institutional scale, that is an attractive risk-adjusted return.

The scale of institutional basis trading explains a pattern that confuses many retail observers. ETF inflows can surge on a day when Bitcoin’s price barely moves, and they can remain strong during periods of sideways trading. This happens because basis traders are responding to futures premium levels, not to price direction. A widening basis attracts more capital into the trade regardless of whether Bitcoin is trending up, down, or sideways. Conversely, when the basis compresses below the cost of capital, institutional ETF flows can dry up even during a rally, because the arbitrage no longer pays.

The perpetual funding rate trade

The dated futures basis trade has a cousin: the perpetual funding rate trade. Instead of buying spot and shorting a dated future, the trader buys spot and shorts a perpetual contract on a crypto exchange such as Binance, Bybit, or Hyperliquid.

The profit mechanism is different. There is no expiration date and no convergence event. Instead, the trader collects funding payments every eight hours when the funding rate is positive. Positive funding means longs are paying shorts, which means the trader holding the short perp leg receives payments continuously.

The advantage of the funding rate trade is flexibility. The trader can enter and exit at any time without waiting for contract expiration. The disadvantage is unpredictability. Funding rates can turn negative during bearish periods, at which point the short leg starts costing money instead of earning it. The trader must monitor rates actively and be prepared to unwind when the trade stops paying.

The funding rate version also carries higher counterparty risk because it typically involves unregulated offshore exchanges. The CME basis trade, by contrast, clears through a regulated clearinghouse, which is why institutional capital overwhelmingly prefers the dated futures version.

A hybrid approach exists for traders who want the flexibility of perpetuals with reduced counterparty risk. Some traders hold their spot leg in a self-custodied wallet or on a regulated exchange and run the short perp leg on a decentralized perpetual exchange such as Hyperliquid or dYdX. The smart contract handles margin and settlement without an intermediary, which removes the centralized exchange failure risk. The tradeoff is that decentralized perp venues sometimes have lower liquidity and wider spreads than their centralized counterparts, which increases execution costs.

The arithmetic: when the trade pays and when it does not

The profitability of a basis trade depends on four numbers: the current basis spread, the cost of capital, the margin requirements, and the holding period.

Consider a concrete example. Bitcoin spot is at $100,000. The three-month CME futures contract trades at $104,000. The annualized basis is approximately 16%. The trader buys $10 million in IBIT shares and shorts $10 million in CME futures.

If the trader’s cost of capital is 5% (prime broker financing), the net yield is 11% annualized. Over three months, that produces approximately $275,000 in profit on $10 million of notional, with near-zero directional risk.

But the arithmetic changes if the basis compresses. If Bitcoin enters a bearish period and futures flip to backwardation (futures below spot), there is no basis to capture and the trade produces a loss. Historically, crypto futures have been in contango approximately 85% of the time, which is why the trade has been consistently profitable over multi-year periods.

The arithmetic also changes with margin. CME Bitcoin futures require initial margin of roughly 40% of notional. If Bitcoin rallies sharply, the short futures leg generates unrealized losses that require additional margin. A 20% rally on a $10 million short futures position creates $2 million in margin calls. The trader must have sufficient liquidity to meet those calls without unwinding the position, because unwinding the short leg while keeping the long leg converts a market-neutral trade into a directional long that may then reverse.

This margin dynamic is the single most common cause of basis trade failure. During the rally from $60,000 to $73,000 in March 2024, several smaller funds were forced to close their short futures legs because they could not meet margin calls. Their IBIT positions, no longer hedged, became naked longs at exactly the moment the rally paused and reversed. The trade that was designed to be market neutral became a directional loss because the fund did not hold enough reserve capital to survive the short-term drawdown on the short leg.

Roll cost is another factor that reduces realized returns. When a dated futures contract approaches expiration, the trader must close the expiring short and open a new short in the next contract month. This roll carries transaction costs, including commissions, the bid-ask spread on both the closing and opening legs, and potential slippage if the roll happens during a volatile session. For quarterly rolls on CME Bitcoin futures, these costs typically consume 0.1% to 0.3% of notional per roll, which can reduce the annualized yield by one to two percentage points.

What this does not cover

This guide does not cover crypto arbitrage strategies beyond the cash-and-carry trade, such as triangular arbitrage, cross-exchange arbitrage, or statistical arbitrage. It does not cover options-based strategies that use the basis as an input, such as calendar spreads or volatility arbitrage. It does not cover the tax treatment of basis trades, which varies significantly by jurisdiction and depends on whether the spot leg is held as a security (ETF shares) or as property (direct cryptocurrency). It does not explain how to execute the trade on specific platforms, because execution details vary by exchange and broker and change frequently.

Practical checks before entering a basis trade

Check the current annualized basis. Platforms such as Coinglass, Laevitas, and The Block publish real-time annualized basis for CME and major exchange futures. If the annualized basis is below your cost of capital, the trade does not pay.

Check open interest on the contract you plan to short. Low open interest means the contract is illiquid, which widens the bid-ask spread and increases the cost of entry and exit. CME Bitcoin front-month contracts typically have sufficient liquidity for institutional-sized trades. Back-month contracts may not.

Check your margin buffer. Calculate the maximum drawdown your short leg can sustain before triggering a margin call. A common rule of thumb is to hold enough reserve capital to absorb a 30% to 40% rally without needing to unwind. If you cannot meet margin calls in a rally, the trade can turn from market-neutral to forced liquidation.

Check the funding rate if using perpetual contracts. Look at the 30-day average funding rate, not the current snapshot. A single elevated snapshot can be an anomaly. The 30-day average tells you whether the trade is structurally paying.

Check counterparty risk. On CME, your counterparty risk is the clearinghouse. On an offshore exchange, your counterparty risk is the exchange itself. If the exchange goes down, your short leg disappears and you are left with a naked long position in a potentially falling market.

Disclaimer

This article is for informational purposes only and does not constitute financial, investment, or trading advice. Basis trading involves risks including margin calls, counterparty default, and potential loss of capital. Past performance of basis spreads does not guarantee future results. Always conduct your own research and consult a qualified financial advisor before making investment decisions. Information accurate as of August 6, 2026.

Russia has moved closer to a state-regulated cryptocurrency regime after President Vladimir Putin signed a new law establishing rules for how crypto markets may operate in the country. The legislation, Bill No. 1194918-8, titled “On Digital Currencies and Digital Rights,” was adopted following parliamentary approval, according to official records from the State Duma.

The framework is designed to bring major crypto services—such as exchanges, brokers, custodians, and other intermediaries—under regulatory oversight, while also setting distinct limits on what retail users can access. It also preserves Russia’s existing prohibition on using crypto for everyday payments within the country.

Key takeaways

• Putin signed Bill No. 1194918-8 (“On Digital Currencies and Digital Rights”) into law, creating a regulated structure for Russia’s crypto market.
• Crypto exchanges must meet regulatory requirements and join a financial market self-regulatory organization.
• Retail participation is constrained to approved crypto assets purchased via intermediaries, with a per-intermediary annual cap of 300,000 rubles (about $3,700).
• Qualified investors are not subject to the same buying restrictions and may access a broader set of cryptocurrencies.
• Crypto payment for goods and services in Russia remains banned, and the law’s main provisions begin on Sept. 1, 2026.

What the law changes for Russia’s crypto market

The law creates a legal basis for crypto market participants operating in Russia, explicitly covering entities such as exchanges, brokers, custodians, and other crypto service providers. In practice, this signals that regulators intend to treat parts of the crypto ecosystem as a formal, supervised market rather than an unregulated activity.

One of the central operational requirements applies to exchanges: operators must comply with regulatory standards and become members of a financial market self-regulatory organization. That combination—direct oversight paired with industry self-regulation—can shape how firms apply for authorization, manage customer processes, and handle compliance obligations.

Retail access capped; qualified investors get more freedom

While the framework opens the door to regulated crypto trading, it does so with a clear split between retail and qualified investors. Under the law, retail users are limited to buying approved crypto assets through intermediaries. The annual purchase cap is set at 300,000 rubles per intermediary (roughly $3,700).

Qualified investors, by contrast, are allowed to purchase any cryptocurrency without the same restrictions. This carve-out matters because it effectively defines who can access the widest range of crypto assets once intermediaries begin operating under the new rules. For consumers and smaller participants, the practical effect will likely be narrower product availability and stricter purchasing limits, at least initially.

Russia’s central bank takes the lead

Oversight under the new legal framework is assigned to the Bank of Russia, which is expected to supervise the regulated crypto market, issue related rules, and determine which crypto assets licensed intermediaries may offer. That structure is important for investors and market operators because it indicates that the “approved assets” list—along with the operating rules that intermediaries must follow—will be established through regulations rather than solely through the law itself.

The exact timing of these implementing measures will influence how quickly licensed providers can offer services to users. Until the Bank of Russia sets the asset and operational parameters, the market’s day-to-day mechanics may remain constrained even after the law is formally signed.

When the rules begin—and what stays prohibited

Timing is a major element of the new legislation. The core provisions take effect on Sept. 1, 2026. Some measures, including rules related to non-resident digital depositories, are scheduled to take effect later, on July 1, 2027.

The law also maintains a ban on using crypto assets to pay for goods and services inside Russia. That means the new regulation focuses on market participation and intermediary activity rather than normalizing crypto payments in retail commerce.

For the industry, this sequencing suggests a phased transition: major compliance changes for licensed intermediaries are likely to be planned well ahead of Sept. 2026, while non-resident depository rules will come later. Traders and users should expect that access and service offerings may change gradually rather than all at once.

Parliament’s role and the path to final approval

Before being signed into law, the bill was approved by the State Duma after final readings in late July, according to coverage referenced through official parliamentary records. The Duma’s approval followed the legislative process that resulted in Bill No. 1194918-8 being signed by Putin.

Earlier reporting highlighted Russia’s broader push to regulate or restrict aspects of crypto activity. The new framework fits that pattern: it does not broadly legalize crypto payments, but it does establish a regulated market structure under central bank supervision and sets explicit boundaries for who can buy what.

Going forward, the key unknowns for market participants are how the Bank of Russia will define “approved” assets, the specific licensing and operational requirements for intermediaries, and how the retail cap will be applied in practice through intermediaries. Those details—scheduled to emerge through implementing rules before the main effective date—will largely determine how usable the regulated crypto market becomes for everyday participants ahead of Sept. 1, 2026.

A Bitcoin strategic reserve is a government-held stockpile of Bitcoin treated as a national asset alongside gold, oil, and foreign currency reserves. The United States signed an executive order creating one in March 2025, and at least a dozen other countries are now exploring the same idea.

Every country holds reserves. The composition of those reserves has changed slowly over centuries, from silver to gold, from gold to dollars, from dollars to a basket of currencies and sovereign debt. The question that the Bitcoin strategic reserve forces into the open is whether digital scarcity belongs in that basket, and whether a government that ignores it risks falling behind those that do not.

This guide explains what a Bitcoin strategic reserve is, how the US version was created, what other governments are doing, what the reserve actually holds, and what the strongest arguments for and against it look like. It does not advocate for or against the policy. The facts are contentious enough without opinion.

How the US strategic Bitcoin reserve was created

The US Strategic Bitcoin Reserve exists because of Executive Order 14178, signed by President Trump on March 6, 2025. The order directed the Secretary of the Treasury to create a reserve capitalized with Bitcoin already in government possession. It also created a separate entity called the US Digital Asset Stockpile for non-Bitcoin digital assets held by the government.

The initial reserve was seeded with approximately 200,000 BTC, most of which came from criminal forfeitures and civil asset seizures conducted by the Department of Justice, the Internal Revenue Service, and the Department of Homeland Security. The largest single source was the Silk Road seizure, which yielded roughly 69,000 BTC in November 2020 and an additional 50,676 BTC in January 2022. Smaller quantities came from dozens of other federal cases involving fraud, money laundering, and sanctions evasion.

The executive order included two provisions that distinguish it from a simple accounting reclassification. First, the order prohibits selling any Bitcoin held in the reserve. This is a break from prior practice, where seized crypto was routinely auctioned by the US Marshals Service. The government had already sold an estimated 195,000 BTC before the order was signed, at prices far below current market value. The no-sale provision is designed to prevent that from happening again.

Second, the order directs the Treasury and Commerce departments to develop “budget-neutral strategies” for acquiring additional Bitcoin. Budget-neutral means the acquisition cannot come from new appropriations or increased taxes. The mechanisms under discussion include revaluing the gold certificates held by the Federal Reserve, which are currently booked at the statutory rate of $42.22 per ounce, and using the difference between that rate and the market price to fund Bitcoin purchases.

What the reserve actually holds

As of mid-2026, the US government holds approximately 198,000 BTC in the Strategic Bitcoin Reserve. The exact figure fluctuates slightly as new forfeiture proceedings conclude and transfer seized assets into the reserve. At current prices, the reserve is valued at roughly $13 billion, making it the largest known government Bitcoin holding in the world.

The Bitcoin is held in cold storage wallets managed by the Treasury Department in coordination with custody providers. The specific custody arrangement has not been fully disclosed for security reasons, though the Treasury has confirmed that the holdings are verifiable through proof of reserves audits conducted quarterly.

The separate Digital Asset Stockpile holds non-Bitcoin digital assets seized in federal cases, including Ethereum, stablecoins, and various altcoins. The executive order treats this stockpile differently from the Bitcoin reserve. While Bitcoin cannot be sold, the non-Bitcoin assets may be liquidated at the government’s discretion, and the proceeds can be used to acquire additional Bitcoin for the reserve.

El Salvador remains the only other country with a confirmed, operational Bitcoin reserve at the national level. President Nayib Bukele began purchasing Bitcoin in September 2021 when the country adopted it as legal tender. El Salvador holds approximately 6,100 BTC, though the country’s purchases have slowed since the International Monetary Fund conditioned a $1.4 billion loan agreement on limiting new Bitcoin acquisitions.

Why governments are interested

The argument for a Bitcoin strategic reserve rests on three pillars: supply scarcity, sovereignty, and diversification.

Supply scarcity is the simplest argument. Bitcoin has a fixed supply cap of 21 million coins, enforced by code that no single entity controls. Approximately 19.7 million of those coins have already been mined, and the issuance rate halves every four years through a mechanism called the halving. Gold has a finite but unknown total supply that increases by roughly 1.5% per year through mining. The US dollar has no supply cap and has expanded its monetary base by more than 40% since 2020. For governments concerned about long-term purchasing power preservation, an asset with a mathematically fixed supply offers a guarantee that no fiat currency or commodity can match. The scarcity argument gains additional force when measured against sovereign debt levels. Global government debt exceeded $100 trillion in 2024. Every dollar, euro, or yen of that debt represents a future claim on currency that does not yet exist. Bitcoin cannot be inflated to service debt, which is precisely why some governments view it as a hedge against the monetary expansion that their own fiscal policies require.

Sovereignty is the geopolitical argument. US dollar reserves held in foreign central banks are ultimately claims on the US financial system. Those claims can be frozen, as the US demonstrated by immobilizing approximately $300 billion in Russian central bank reserves after the 2022 invasion of Ukraine. Bitcoin held in self-custody cannot be frozen by any foreign government. For countries seeking to reduce dependence on dollar-denominated reserves, Bitcoin offers a form of sovereign insurance that no other asset provides.

Diversification is the portfolio argument. Central bank reserves are typically concentrated in US Treasuries, gold, and a small number of foreign currencies. Adding an uncorrelated asset to a reserve portfolio reduces overall portfolio risk, even if that asset is individually volatile. Research from ARK Invest and Fidelity Digital Assets has argued that a 1% to 5% Bitcoin allocation in a sovereign reserve portfolio would have improved risk-adjusted returns over every five-year period since 2014. The diversification case does not require Bitcoin to outperform every year. It requires Bitcoin to behave differently from existing reserve assets during the periods that matter most. During the banking stress of March 2023, Bitcoin rallied while regional bank stocks collapsed. During periods of dollar weakness, Bitcoin has historically appreciated in dollar terms. These correlation properties are what portfolio theory says a reserve manager should want, even if the asset itself is more volatile than any single holding in the existing portfolio.

The legislation wave: who else is moving

The US executive order triggered a wave of similar proposals around the world. The dynamics vary by country, but the pattern is consistent: one branch of government introduces a Bitcoin reserve proposal, public debate follows, and the proposal either advances or stalls depending on the political environment.

Brazil introduced a bill in November 2024 to create a Sovereign Strategic Bitcoin Reserve holding up to 5% of the country’s international reserves. The Czech National Bank governor stated publicly that the institution was considering a Bitcoin allocation. Poland’s presidential candidate included a strategic reserve proposal in his campaign platform.

In Asia, Japan’s parliament debated a Bitcoin reserve proposal in late 2024, though the government initially declined to pursue it. Hong Kong legislators have proposed adding Bitcoin to the Exchange Fund, the territory’s sovereign wealth vehicle.

In the United States, the action at the state level has moved faster than at the federal level in some cases. Texas introduced legislation to create a state-level Bitcoin reserve funded through voluntary Bitcoin donations and seized assets. New Hampshire signed a Bitcoin reserve bill into law, becoming the first US state to do so, authorizing the state treasurer to allocate up to 5% of certain public funds to Bitcoin and other digital assets with a market capitalization above $500 billion. Arizona and Oklahoma have advanced similar proposals. The state-level reserves are typically smaller in scope and funded through existing investment authorities, but they represent a parallel adoption track that does not require Congressional approval.

The competitive dynamic between countries is worth understanding. Game theory suggests that if one major economy builds a Bitcoin reserve, others face a choice between accumulating at current prices or potentially accumulating at higher prices later, after the first mover has already captured the advantage. This is the logic behind what Bitcoin proponents call “the Nash equilibrium argument”: once one sovereign begins accumulating, rational self-interest pushes others to follow. Whether this dynamic plays out in practice depends on whether government decision-makers treat Bitcoin as a legitimate reserve asset or as a speculative experiment that carries more political risk than strategic benefit.

The connection between Bitcoin treasury companies and government reserves is worth noting. Companies such as MicroStrategy (now Strategy) demonstrated the corporate treasury model starting in 2020, accumulating more than 200,000 BTC on their balance sheet. The corporate adoption provided a proof of concept that governments are now adapting to a sovereign context.

What the reserve does not do

The strategic reserve does not make Bitcoin legal tender in the United States. Legal tender status would require separate legislation and would mean that merchants would be required to accept Bitcoin as payment, which the executive order does not contemplate.

The reserve does not directly affect the Bitcoin ETF market. The government’s holdings are in cold storage, not in ETF wrappers, and the no-sale provision means the reserve Bitcoin will not enter the open market through government liquidation. However, the reserve’s existence has been cited by institutional analysts as a signal of legitimacy that supports long-term ETF demand.

The reserve does not generate yield. Unlike Treasury bonds or even gold leasing arrangements, Bitcoin held in cold storage produces no income. The opportunity cost of holding a non-yielding asset is a recurring criticism, particularly from economists who argue that the same capital deployed in Treasury securities would generate billions in annual interest income. At current interest rates, $13 billion in Treasury securities would generate roughly $500 million to $600 million per year. The Bitcoin reserve generates zero. Proponents respond that gold also generates no yield in vault storage, yet no serious economist argues that the US should liquidate its gold reserves to buy Treasuries. The yield argument, they contend, misunderstands the purpose of a reserve asset, which is to preserve value across decades, not to produce income in any given year.

The reserve does not protect against Bitcoin price declines. If Bitcoin drops 50%, the reserve loses 50% of its value. There is no insurance, no backstop, and no rebalancing mechanism described in the executive order. The implicit assumption is that Bitcoin’s long-term trajectory will be upward, but the order does not address what happens to the reserve in a prolonged bear market.

The opposing case at full strength

The strongest arguments against a Bitcoin strategic reserve deserve their full weight.

Volatility is the most immediate objection. Bitcoin has experienced drawdowns exceeding 50% four times in its history. A reserve asset that can lose half its value in months introduces a form of balance sheet risk that gold and Treasuries do not carry. The counterargument that Bitcoin recovers from every drawdown is true historically but is not a guarantee, and it does not address the political consequences of a reserve losing billions in value during a single quarter.

Concentration risk is the systemic concern. If the US government holds 200,000 BTC and the no-sale provision is ever reversed, the mere possibility of government selling could depress the market. The government becomes both a holder and a potential source of supply overhang, which creates a reflexive dynamic where the reserve’s existence affects the value of what it holds. The same dynamic exists with gold, where central bank sales have historically moved the gold price, but Bitcoin’s market is far smaller and more sensitive to large holders. The US reserve represents roughly 1% of all Bitcoin that will ever exist. Any change in the no-sale policy would be a market moving event before a single coin was transferred.

Fiduciary duty is the governance objection. Government reserves are ultimately public assets. Allocating public assets to a volatile, speculative instrument raises questions about whether officials are meeting their fiduciary obligations to taxpayers. The budget-neutral acquisition strategy partly addresses this, since it avoids direct taxpayer funding, but the opportunity cost argument remains.

Environmental concerns, while less prominent in 2026 than in prior years due to Bitcoin mining’s increasing renewable energy share, are still raised by critics who argue that government endorsement of Bitcoin implicitly endorses the energy consumption of proof of work mining. The Cambridge Bitcoin Electricity Consumption Index estimates that the Bitcoin network consumes roughly 150 terawatt hours per year, comparable to the energy consumption of some mid-sized countries. Proponents counter that an increasing share of that energy comes from renewable or stranded sources, and that the network’s energy consumption is the cost of maintaining a decentralized monetary system that no government can shut down.

What this does not cover

This guide does not cover the mechanics of Bitcoin mining or the proof of work consensus mechanism that secures the network. It does not cover the tax treatment of government-held Bitcoin or the accounting standards that apply to sovereign digital asset holdings. It does not cover the separate question of central bank digital currencies, which are government-issued digital currencies that are conceptually distinct from holding Bitcoin as a reserve asset.

Practical checks for tracking the reserve

Check on-chain holdings. The US government’s known Bitcoin addresses are tracked by blockchain analytics firms including Arkham Intelligence and Glassnode. Movements from these addresses are published in real time and can signal policy changes before official announcements.

Check legislative status. The executive order created the reserve, but Congressional legislation could modify, expand, or eliminate it. Track bills related to the Strategic Bitcoin Reserve through Congress.gov or crypto policy trackers such as the Blockchain Association’s legislative dashboard.

Check other countries. Government Bitcoin adoption is a competitive dynamic. If major economies begin accumulating, the game-theory pressure on non-holders increases. Monitor central bank announcements, parliamentary debates, and presidential campaigns in major economies for reserve-related proposals.

Check the gold certificate revaluation debate. The budget-neutral acquisition strategy most discussed involves revaluing the Fed’s gold certificates from $42.22 per ounce to market price. This would release hundreds of billions in paper value that could theoretically be used to purchase Bitcoin. The revaluation requires legislative action and faces significant opposition, but it remains the most plausible path to expanding the reserve beyond seized assets.

Disclaimer

This article is for informational purposes only and does not constitute financial, investment, or policy advice. Government reserve policies are subject to change through executive action, legislation, or judicial review. Bitcoin is a volatile asset and past performance does not guarantee future results. Always conduct your own research before making investment decisions. Information accurate as of August 6, 2026.

Blockchain security firm CertiK says it has observed early laundering behavior tied to the ongoing Coldcard hardware wallet exploit: about 64 Bitcoin (valued at roughly $4.17 million) and 200 Ether (about $380,000) were reportedly sent to crypto mixing services after the theft began.

CertiK-linked onchain movements include a transfer of the 64 BTC from a source address labeled by CertiK to the Wasabi mixing protocol on Tuesday, while the 200 ETH was reportedly moved to Tornado Cash on Wednesday, according to CertiK’s X updates and address-level data shared by the firm.

Key takeaways

• CertiK reports 64 BTC and 200 ETH connected to the Coldcard exploit were routed through Wasabi and Tornado Cash, respectively.
• Mixing services pool funds and obscure transaction linkages, which can reduce recovery odds for stolen assets.
• TRM Labs’ analysis suggests most victim funds remain concentrated in a limited set of attacker-controlled addresses with relatively few mixing attempts so far.
• Galaxy Digital previously estimated losses from the Coldcard incident are at least $100 million in BTC, with a possible larger figure if additional attack waves are confirmed.

Laundering signals after the Coldcard theft

According to blockchain security platform CertiK, a portion of the stolen funds has already been processed through privacy-focused tooling designed to break onchain traceability. The Bitcoin leg involved approximately 64 BTC moving to Wasabi, a well-known mixing protocol that pools deposits and then redistributes funds in ways that make sender-recipient matching significantly harder.

On the Ethereum side, CertiK said 200 ETH was transferred to Tornado Cash. As with other mixers, Tornado Cash works by combining deposits and obfuscating the direct onchain relationship between the address that initiated a transaction and the eventual withdrawal target.

CertiK also suggested the behavior may not reflect only a single actor. “We think it might be a smaller exploiter. There’s likely a few copycats after the initial exploit,” a CertiK spokesperson told Cointelegraph. That aligns with broader incident reporting that has described multiple parties attempting to monetize the same underlying vulnerability.

Why mixers matter for recovery efforts

When stolen assets are transferred into mixers, investigators often lose the clean “paper trail” that typically helps identify where funds end up. Mixing protocols generally work by aggregating multiple users’ funds and then redistributing in a way that disrupts public linkage between deposits and withdrawals.

That structural design can lower the probability of timely asset recovery, especially when stolen funds are quickly moved and there is limited opportunity for authorities and compliance teams to intervene. Even so, blockchain analysis is not rendered useless—large-scale monitoring can still sometimes detect patterns, track high-level flows, and correlate timing and fund sources, depending on how thoroughly attackers operationalize the mixing step.

The wider context also underscores the stakes: earlier this year, the Kelp DAO hack saw an attacker launder nearly all of roughly 75,700 ETH—then valued around $175 million—primarily through THORChain, with additional use of the Umbra privacy protocol. That precedent illustrates how quickly adversaries can shift stolen funds across multiple privacy and liquidity layers.

Coldcard losses still mounting, with wave-by-wave tracking

The Coldcard exploit has already grown into one of the largest crypto hacks reported for 2026. Galaxy Digital previously stated the incident drained at least $100 million worth of Bitcoin across three confirmed attack waves sourced from around 7,300 victim wallets.

Galaxy also identified a suspected fourth wave, which—if confirmed—could lift projected losses to approximately $130 million in BTC. This “wave” framing matters to traders, holders, and incident responders because it implies the attacker activity may not be confined to a single moment, and that additional funds could be moving even after initial reports.

In parallel, CertiK’s observations of mixer usage offer a practical marker of how quickly some stolen funds are being processed. While the amounts highlighted by CertiK are not the full scale of the event, they signal that at least some attackers appear to be prioritizing trace obfuscation early in the lifecycle of the theft.

TRM Labs: most funds remain concentrated, suggesting limited follow-through

Further insight comes from onchain tracing by TRM Labs, which—according to a Thursday report—found that the majority of victim funds were still pooled in a relatively small number of attacker-controlled addresses, with limited mixing activity so far.

TRM Labs also said that differences in transaction construction across each attack wave suggest multiple attackers behind the exploit. This is consistent with Galaxy’s earlier findings that at least 15 different attackers may have exploited the Coldcard vulnerability.

TRM Labs attributed the underlying issue to a firmware bug from March 2021 that weakened seed randomness on some Coldcard wallets. The company said that the reduced key strength made the affected keys brute-forceable without physical access, highlighting why the exploit could be rapidly replicated once the vulnerability’s practical impact became known.

On the broader theme of prevention, Dragonfly managing partner Haseeb Qureshi argued on social media that comparatively small improvements could have mitigated the risk. He referenced “$2 of AI hardening” as a shorthand for strengthening defenses, citing reports that some AI models rediscovered the vulnerability leading to the attack in less than 20 minutes.

What to watch next

As the Coldcard case continues to evolve, the key variable is whether additional funds keep flowing into mixers and whether concentration patterns change across wallets and attacker clusters. Investors and incident-trackers should watch for confirmation of further attack waves, and for whether laundering activity expands beyond the early examples highlighted by CertiK and the limited mixing behavior observed by TRM Labs.

Crypto ETF options let traders buy calls and puts on Bitcoin and Ethereum exchange-traded funds. This guide explains how they work, why they matter, and what strategies traders actually use.

Options on cryptocurrency exchange-traded funds arrived in the United States in late 2024 and immediately changed how institutional and retail traders interact with the crypto market. Before these products existed, traders who wanted leveraged or hedged exposure to Bitcoin or Ethereum had two choices: trade perpetual futures on offshore exchanges or use the limited options contracts available on platforms like Deribit. Both paths carried counterparty risk, regulatory ambiguity, and operational complexity that kept most traditional finance participants on the sidelines.

The approval of options on spot Bitcoin ETFs changed that equation. For the first time, a trader with a standard brokerage account at Fidelity, Schwab, or Interactive Brokers could buy a call option on Bitcoin exposure using the same interface, the same clearing infrastructure, and the same regulatory protections that apply to options on the S&P 500.

This guide explains what crypto ETF options are, how they are priced, what strategies traders use, and where the risks hide.

How options work at the most basic level

An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a specific date. The buyer pays a premium for this right. The seller (also called the writer) collects the premium and takes on the obligation.

There are two types of options. A call option gives the buyer the right to buy the underlying asset at the strike price. A put option gives the buyer the right to sell the underlying asset at the strike price. Every option contract specifies four things: the underlying asset (in this case, shares of a crypto ETF), the strike price, the expiration date, and whether it is a call or a put.

When a trader buys a call option on IBIT (BlackRock’s spot Bitcoin ETF) with a strike price of $50 and an expiration date 30 days away, they are paying a premium today for the right to buy 100 shares of IBIT at $50 per share at any point in the next 30 days. If IBIT rises to $60, the option is worth at least $10 per share, or $1,000 per contract. If IBIT stays below $50, the option expires worthless and the trader loses only the premium paid.

Put options work in the opposite direction. A trader who buys a put option on IBIT with a $50 strike profits when IBIT falls below $50. The put gives them the right to sell at $50 even if the market price drops to $40, $30, or lower.

Which crypto ETF options are available

As of mid 2026, options are available on several spot cryptocurrency ETFs listed in the United States. The most actively traded include options on IBIT (BlackRock iShares Bitcoin Trust), FBTC (Fidelity Wise Origin Bitcoin Fund), and ETHA (BlackRock iShares Ethereum Trust). The Options Clearing Corporation (OCC) clears all of these contracts, providing the same counterparty guarantee that backs every listed option in the US market.

The approval process was not instant. The SEC approved spot Bitcoin ETFs in January 2024 but did not approve options on those ETFs until October 2024. The delay reflected concerns about market manipulation, position limits, and the interaction between spot crypto markets (which trade 24/7) and options markets (which trade during US exchange hours). The SEC ultimately set position limits of 25,000 contracts for Bitcoin ETF options, later expanded as liquidity grew.

Ethereum ETF options followed a similar path. Spot Ethereum ETFs launched in July 2024, and options approval came in 2025 after the SEC reviewed trading data from the initial months of spot ETF trading.

The volume numbers tell the adoption story. IBIT options regularly rank among the top 10 most actively traded option contracts in the entire US market, alongside options on SPY, QQQ, and AAPL. On peak days, IBIT options volume has exceeded 1.5 million contracts, representing notional exposure to billions of dollars in Bitcoin.

How crypto ETF options are priced

Options pricing follows the Black-Scholes framework, modified for the specific characteristics of crypto ETFs. The five primary inputs are the current price of the underlying ETF, the strike price, the time to expiration, the risk-free interest rate, and the implied volatility of the underlying asset.

Implied volatility is where crypto ETF options diverge most dramatically from traditional equity options. The implied volatility of Bitcoin ETF options typically ranges from 50% to 90% annualized, compared to 15% to 25% for S&P 500 options. This higher volatility means crypto ETF options are significantly more expensive in absolute terms than options on traditional equity ETFs.

The volatility smile, a pattern where out-of-the-money options trade at higher implied volatilities than at-the-money options, is particularly pronounced in crypto ETF options. Put options on Bitcoin ETFs tend to trade at elevated implied volatilities because the market prices in the possibility of sharp drawdowns. Call options far above the current price also carry premium because Bitcoin has historically produced large upside moves that would be considered extreme outliers in equity markets.

Time decay, measured by the Greek letter theta, erodes option value as expiration approaches. This effect is especially important for crypto ETF options because the high implied volatility means the absolute dollar amount of daily time decay is larger than for comparable equity options. A 30-day at-the-money call option on IBIT might lose $0.15 to $0.25 per day in time value, while a similar option on SPY might lose $0.05 to $0.10.

Delta measures how much the option price changes for a $1 move in the underlying ETF. An at-the-money call has a delta near 0.50, meaning it moves roughly $0.50 for every $1 move in the ETF. Deep in-the-money options have deltas approaching 1.0 and behave almost like the underlying shares. Far out-of-the-money options have low deltas and are essentially leveraged bets on large price moves.

Strategies traders actually use

The strategies applied to crypto ETF options range from simple directional bets to complex multi-leg structures. The most common fall into four categories: directional, income, hedging, and volatility.

Long calls and long puts are the simplest directional strategies. A trader who expects Bitcoin to rise buys calls. A trader who expects Bitcoin to fall buys puts. The maximum loss is limited to the premium paid, while the potential profit is theoretically unlimited for calls and substantial for puts (down to zero on the underlying). The appeal of long options is defined risk: a trader knows exactly how much they can lose before entering the trade.

Covered calls are the most popular income strategy. A trader who holds shares of IBIT sells call options against those shares, collecting the premium as income. If IBIT stays below the strike price, the calls expire worthless and the trader keeps both the shares and the premium. If IBIT rises above the strike, the shares are called away at the strike price, capping the upside. Covered call strategies on Bitcoin ETFs can generate annualized yields of 20% to 40% because of the high implied volatility, far above the 5% to 10% typical for equity covered calls.

Protective puts serve as portfolio insurance. A trader who holds IBIT and wants to protect against a drawdown buys put options at a strike price below the current market. If Bitcoin drops sharply, the put gains value and offsets losses on the underlying position. The cost of this insurance is the put premium, which can be significant given crypto’s high implied volatility.

Vertical spreads reduce the cost of directional bets by combining a long option with a short option at a different strike. A bull call spread involves buying a call at a lower strike and selling a call at a higher strike. The sold call reduces the net premium paid but caps the maximum profit. Bear put spreads work the same way in reverse. Spreads are popular among traders who have a directional view but want to reduce their cost basis and define their maximum risk.

Straddles and strangles are volatility strategies that profit from large moves in either direction. A straddle involves buying both a call and a put at the same strike price. A strangle involves buying a call and a put at different strike prices, with the call strike above and the put strike below the current price. These strategies are commonly used around major events such as Federal Reserve meetings, Bitcoin halving events, or regulatory announcements that could move the market sharply in either direction.

Calendar spreads exploit differences in time decay between near-term and longer-term options. A trader sells a short-dated option and buys a longer-dated option at the same strike price. The trade profits when the near-term option decays faster than the longer-term option, which typically occurs when the underlying price stays near the strike. Calendar spreads are particularly attractive on crypto ETFs because the high implied volatility produces larger absolute differences in time decay between expirations, creating wider profit zones than the same structure would offer on a traditional equity ETF.

Why the options market matters for crypto prices

The growth of the crypto ETF options market has introduced a feedback mechanism that did not previously exist in cryptocurrency markets. Market makers who sell options must continuously hedge their exposure by buying or selling the underlying ETF shares. This hedging activity, known as delta hedging, can amplify or dampen price moves depending on the aggregate positioning of the options market.

When market makers are net short gamma (meaning they have sold more options than they have bought), their hedging activity amplifies price moves. They must buy more shares as prices rise and sell more shares as prices fall, creating a positive feedback loop. When market makers are net long gamma, the opposite occurs: their hedging activity dampens price moves by requiring them to sell into rallies and buy during dips.

The concept of a “max pain” price, the price at which the most options expire worthless and option sellers retain the most premium, has become a closely watched metric in crypto markets. As expiration approaches, the hedging flows of market makers tend to push the price of the underlying ETF toward the max pain level, creating a gravitational effect that did not exist when crypto traded without a listed options market.

Open interest data from crypto ETF options provides a transparent view of market positioning that was previously available only through offshore derivatives exchanges. Analysts can see where large concentrations of calls and puts are positioned, which strike prices act as support or resistance, and how the market’s expectations for future volatility compare to realized volatility.

Risks specific to crypto ETF options

Crypto ETF options carry all the standard risks of options trading plus several risks unique to the crypto market.

Volatility risk cuts both ways. High implied volatility makes options expensive to buy. A trader who buys a call option may be correct about the direction of Bitcoin but still lose money if implied volatility drops (a phenomenon called “vol crush”). This commonly occurs after anticipated events when uncertainty resolves and implied volatility collapses.

Weekend and after-hours risk exists because Bitcoin trades 24/7 but ETF options trade only during US market hours. A significant price move over the weekend is fully reflected in the ETF price at Monday’s open, which can cause large gaps in option values. A trader who sold puts on Friday afternoon may face substantial losses on Monday morning if Bitcoin dropped 15% over the weekend.

Liquidity risk varies significantly across strikes and expirations. At-the-money options on IBIT are extremely liquid, with tight bid-ask spreads of $0.01 to $0.03. But far out-of-the-money options or options with distant expirations can have spreads of $0.10 to $0.30, which materially affects the cost of entering and exiting positions.

Correlation risk affects traders who use crypto ETF options to hedge positions in actual cryptocurrency. The ETF price tracks the spot price of Bitcoin closely but not perfectly. Tracking error, fund fees, and the mismatch between 24/7 crypto markets and traditional market hours can cause the ETF to diverge from spot Bitcoin at exactly the moment a hedge is needed most.

Assignment risk applies to sellers of American-style options, which can be exercised at any time before expiration. A trader who has sold in-the-money call options may be assigned at an inconvenient time, forcing them to deliver shares they may not hold.

What this does not cover

This guide does not cover the tax treatment of options trading, which varies by jurisdiction and can be complex when options expire, are exercised, or are closed before expiration. It does not cover the specific margin requirements set by individual brokers, which can differ from the minimum requirements set by the OCC. It does not cover options strategies involving more than two legs, such as iron condors, butterflies, or ratio spreads, which require a deeper understanding of options Greeks and risk management. It does not cover options on crypto futures ETFs, which existed before spot ETFs and have different pricing dynamics due to the futures roll cost embedded in the underlying product.

Practical checks for evaluating a crypto ETF options trade

Check the implied volatility rank. Compare the current implied volatility to its range over the past 30, 60, and 90 days. If implied volatility is in the top quartile of its recent range, options are relatively expensive, which favors selling strategies. If implied volatility is in the bottom quartile, options are relatively cheap, which favors buying strategies.

Check the bid-ask spread. Divide the spread by the midpoint price to get the spread as a percentage of the option value. If this number exceeds 5%, the transaction costs will significantly erode returns, particularly for strategies that require multiple legs.

Check the event calendar. Identify any upcoming events (FOMC meetings, ETF flow reports, Bitcoin network upgrades, regulatory deadlines) that could cause a volatility spike or collapse. Buying options before a volatility event and selling them after is a common mistake that results in losses even when the directional call is correct.

Check the Greeks. Know your delta exposure (directional risk), gamma exposure (how delta will change), theta (daily time decay cost), and vega (sensitivity to implied volatility changes). For multi-leg strategies, calculate the net Greeks of the entire position, not just the individual legs.

Check the position size. Options provide leverage, which means losses can accumulate quickly. A common guideline is to risk no more than 1% to 3% of total portfolio value on any single options trade. For crypto ETF options, where the underlying asset can move 10% or more in a single day, conservative position sizing is especially important.

Disclaimer

This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency investments carry significant risk, and you should conduct your own research before making any investment decisions. Information is accurate as of August 6, 2026.

Rarible has launched its NFT marketplace on Solana after months of development, naming Claynosaurz as its first featured collection.

Rarible expands its marketplace to Solana

Rarible announced the launch on Thursday, marking its latest expansion beyond the blockchain networks already supported by its NFT marketplace.

Claynosaurz, a Solana-based entertainment and NFT brand built around animated dinosaur characters, will serve as the first featured collection. Rarible said it would onboard additional projects from across the network over the coming days and weeks.

“We’ve actually been working on Solana for months,” the company said. “Today, we’re incredibly excited to finally say it: Rarible is now live on Solana.”

The company did not disclose how many collections would be added during the initial rollout or provide a fixed schedule for future integrations.

Rarible said its team spent several months developing and testing the Solana marketplace. It also consulted NFT communities to understand how individual projects approach their identities, cultures, and collector bases.

According to the company, feedback from those discussions shaped some of its product decisions. Rarible said it wants to create collection-specific experiences instead of merely listing assets on a standard marketplace interface.

Gacha Station previewed Rarible’s Solana plans

Rarible described its earlier Gacha Station release on Solana as an initial look at the broader integration rather than a standalone product.

Gacha Station lets users purchase randomized digital collectibles, borrowing its format from capsule-toy and loot-box systems. Its rollout gave Rarible an early way to test products and user activity on Solana before launching the wider marketplace.

The company characterized the current marketplace as a foundation for a larger expansion. Planned updates include additional collections, new features, improvements to the trading experience, editorial content and community campaigns.

Rarible did not provide transaction-volume targets or details about how it plans to compete with established Solana NFT platforms. Marketplace adoption will depend partly on the collections it secures and whether it can attract collectors already active elsewhere in the ecosystem.

Why Solana matters for Rarible

Solana offers relatively low transaction fees and faster settlement than several older blockchain networks, making it a common venue for frequent NFT trading and lower-priced digital collectibles.

Adding the network allows Rarible to reach Solana-native creators and collectors without requiring them to move assets to another blockchain. It also gives projects another marketplace through which they can present and trade their collections.

The launch comes as NFT marketplaces face pressure to distinguish themselves through creator tools, community features and collection-specific products. Trading fees have also fallen across the sector as competing platforms seek to attract liquidity.

For U.S. users, Rarible’s announcement did not identify any new geographic restrictions or changes to marketplace access. NFT regulatory treatment in the United States can depend on how a collection is marketed and structured, rather than the blockchain on which it trades.

EU lawmakers seek a review of NFT rules

Rarible’s Solana expansion also arrives as European policymakers consider whether NFTs should fall more clearly within the bloc’s crypto regulations.

In July, the European Parliament adopted a policy report calling on the European Commission to examine decentralized finance, staking, crypto lending, borrowing and NFTs following the full rollout of the Markets in Crypto-Assets regulation.

The report did not change MiCA or create immediate obligations for NFT marketplaces. However, it established Parliament’s position that areas outside the existing framework may require further review.

MiCA’s transition period ended on July 1, requiring covered crypto-asset service providers to secure EU-wide or national authorization to continue operating across the bloc. Whether future rules extend more explicitly to NFT services could affect marketplaces such as Rarible as they add networks, collections and users.

For now, Rarible plans to continue expanding its Solana marketplace gradually, with its next phase centered on onboarding projects and refining the platform using feedback from the network’s communities.