Bybit launches XAUT options with USDT settlement for gold hedging

Cryptocurrency exchange Bybit has launched options trading for Tether Gold (XAUT), a token backed by physical gold. According to Bybit’s announcement, the new product settles in USDT and offers investors the opportunity to hedge against gold price fluctuations, take directional positions, and build volatility-based strategies.

Product structure explained

The newly introduced XAUT options on Bybit can be structured via the exchange’s RFQ (Request for Quote) system, which is commonly used for over-the-counter trades. Each contract represents 1 XAUT, equivalent to one troy ounce of physical gold. These are European-style options, which means they can only be exercised at the contract’s expiration date.

Glossary: A European-style option is a type of derivatives contract that can only be exercised on the expiration date. RFQ refers to a trading method, often used for large-volume deals, where price quotes are received directly from the counterparty.

Options give buyers the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on a set date or under certain conditions. Call options grant the right to buy, while put options provide the right to sell. These instruments are typically used for hedging against price movements or for executing strategies based on volatility expectations.

Orbit Markets collaboration

To ensure ample liquidity for its new product at launch, Bybit has partnered with Orbit Markets. Orbit Markets is known as an options market maker active in both crypto and traditional financial markets. The announcement highlighted that the Orbit team includes industry veterans with a background in precious metals trading desks.

Yang also stressed the growing interest in traditional derivatives products within the crypto space. Orbit Markets positions itself as a market maker delivering institutional-level pricing and liquidity, aligning with this evolving demand.

Market context and positioning

The global gold options market currently sees trading volumes in the billions of dollars. Major venues in this space include CME and India-based MCX, while a significant share of trading takes place in the over-the-counter market. Bybit’s move is seen as a step toward making a well-established asset class more prominent on a large cryptocurrency platform.

XAUT options have been available on some smaller platforms since November 2024. However, Bybit’s entry stands out for introducing the product at scale, supported by institutional-grade liquidity, to a broader spectrum of crypto market participants.

Bybit’s addition of XAUT options underscores the platform’s commitment to offering advanced derivatives products and further connecting traditional assets with the crypto sector.

This development reflects a broader trend of convergence between traditional finance and digital assets, with tokenized real-world assets gaining traction among crypto investors seeking diversified strategies.

Market observers say the new offering may attract both individual and institutional traders aiming to tap into gold price dynamics through crypto-native instruments.

With the collaboration between Bybit and Orbit Markets, the XAUT options are set to launch with robust liquidity and pricing transparency, fostering confidence among market participants.

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