In response to the ongoing volatility spikes in the crypto market, crypto exchange Butfinex has announced the launch of its new volatility futures products on Bitcoin and Ethereum. According to its announcement, Bitfinex, through its derivatives platform Bitfinex derivatives launched the two perpetual futures.
Bitfinex launches new Bitcoin and Ethereum volatility futures
The platform is basing the new contracts on the Volmex volatility index, the Bitcoin Implied Volatility Index (BVIV), and the Ethereum Implied Volatility Index (EVIV). The indexes track expected volatility or implied volatility of Bitcoin and Ethereum options contracts over 30 days. Bitfinex’s head of derivatives Jag Kooner mentioned that the indices will allow the platform’s users to monitor and trade on the implied volatility of Bitcoin and Ethereum in the perpetual market.
Perpetual futures are a type of market that allows traders to speculate on the future price of an asset without having an expiration date. Krooner explained that perpetual futures offer the most tradable format in the market because other contracts rely on a dated structure. He clarified that tracking the implied volatility in Ethereum and Bitcoin options contracts without the need to roll provides an opening for retail and institutional traders.
Implications and market reactions to the new offering
These newly created contracts will join over 60 perpetual futures on the exchange’s platform. The contracts will join digital assets as well as other forms of commodities like gold, silver, oil, fx, and equities. Kooner added that the new contracts will provide an opportunity for the firm to add implied volatility as another asset class on the platform.
In options trading, implied volatility is a metric that indicates how much the market is predicting the value of an asset to change over some time. If investors predict a lot of movement, volatility will be on the rise, however, if assets are predicted to be quiet, then volatility decreases.
Kooner mentioned that the firm decided to list the trading tools in response to digital assets touching all-time highs recently. He noted that with assets hitting all-time high prices, it is easier for the market to experience volatility, which means the indexes will be utilized.
This announcement is coming off the back of crypto-gems-in-april-2024/” data-type=”post” data-id=”505713″ target=”_blank” rel=”noopener”>crypto volatility hitting new all-time highs last month. The crypto volatility index, the metric that measures futures volatility over 30 days and serves as a market fear index hit 85 points on March 11. The CVI’s all-time high came right after Bitcoin hit a new all-time high price of $73,000 on March 13. Presently, the crypto volatility index (CVI) is around 76 points.
