Bitfinex Introduces New Bitcoin and Ether Volatility Futures Amid Crypto Market Unrest
Summary:
Bitfinex, a leading cryptocurrency exchange, is launching new Bitcoin (BTC) and Ether (ETH) volatility futures to address increased instability in the crypto market. The new perpetual futures contracts, which are built on Volmex Implied Volatility indices, track the forecasted volatility of BTC and ETH options contracts over a 30-day period. The additional contracts will allow Bitfinex to add implied volatility as another asset class.
Bitfinex, a renowned cryptocurrency exchange house, is introducing new Bitcoin (BTC) and Ether (ETH) volatility futures to cater to the surging volatility in crypto markets. This initiative has been launched via its own derivatives platform, Bitfinex Derivatives, courtesy of iFinex Financial, as announced on April 3.
The recently launched perpetual futures contracts are grounded in Volmex Implied Volatility indices, specifically the Bitcoin Implied Volatility Index (BVIV) and Ethereum Implied Volatility Index (EVIV). This approach aims to track the anticipated volatility within 30 days, or the implied volatility of BTC and ETH options contracts.
The introduction of these indices furnishes customers with a chance to track and trade implied Bitcoin and Ether volatilities via a straightforward perpetual format, notes Jag Kooner, Head of Derivatives at Bitfinex.
Perpetual futures, sometimes referred to as perpetual swaps or “perpetuals”, are derivatives that allow traders to speculate on the future price of an asset indefinitely. Kooner holds the viewpoint that perpetual futures are the most tradeable format within the crypto sphere, primarily due to their departure from contracts based on a dated structure.
In its offering, the exchange platform also includes over 60 perpetual contracts spanning not only cryptocurrencies but a broad gamut of assets, from precious metals and oil to forex and equities. Kooner emphasizes that the newly added contracts would facilitate the addition of implied volatility as a novel asset class.
Implied volatility is a critical metric in options trading which denotes the market's expectation for asset value fluctuations over a specific duration. High volatility is an indicator of high anticipated movement while lower volatility suggests little expected price movement.
The recent addition of these trading tools on Bitfinex's platform comes as a response to the record-breaking prices of many cryptocurrencies. Kooner suggests that these indices have never been more useful given the high likelihood of increased volatility and significant pullbacks following such high prices.
The landmark introduction of these new contracts follows close on the heels of all-time highs in cryptocurrency volatility as reported in March 2024. The Crypto Volatility Index (CVI) which monitors future volatile activity within 30 days, hit a high of 85 points on March 11. However, currently, the implied CVI-measured crypto volatility stands at approximately 76.
Published At
4/3/2024 11:00:00 AM
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