- Bitfinex introduces Bitcoin and Ether volatility futures to navigate rising crypto market fluctuations.
- New contracts utilize Volmex Implied Volatility indexes for BTC and ETH, offering a novel trading approach.
- The derivatives enable trading on expected asset volatility without an expiry date, broadening investor access.
Bitfinex, a cryptocurrency exchange, has rolled out new trading instruments aimed at harnessing the recent ups and downs in the crypto world. The exchange’s derivative arm, Bitfinex Derivatives, has added Bitcoin and Ether volatility futures to its offerings, providing a fresh way for investors to engage with the market’s dynamics.
These innovative contracts draw on the Volmex Implied Volatility indexes, specifically the Bitcoin Implied Volatility Index (BVIV) and Ethereum Implied Volatility Index (EVIV). These indexes predict the 30-day volatility of Bitcoin and Ethereum, based on the behavior of options contracts for these currencies.
Innovative Trading Solutions
Jag Kooner, who oversees derivatives at Bitfinex, shared with Cointelegraph that these indices are designed not just for monitoring but also for active trading of Bitcoin and Ether’s implied volatility. This approach simplifies engagement with the market’s anticipated fluctuations.
Perpetual futures, the format of these new contracts, are favored in crypto trading for their lack of expiration, allowing continuous speculation on future prices. This feature makes them particularly appealing to a broad spectrum of investors, from individuals to institutions.
Expanding the Derivatives Landscape
Bitfinex’s derivatives platform already boasts a wide array of over 60 perpetual futures contracts. These cover various asset classes, including cryptocurrencies, commodities like gold and oil, foreign exchange, and stocks. The addition of Bitcoin and Ether volatility futures marks a significant expansion, introducing implied volatility as a new asset class for trading.
Implied volatility is crucial in options trading, indicating market predictions about an asset’s price changes over time. High expectations of price movement increase volatility, whereas low expectations decrease it.
The introduction of these new trading tools by Bitfinex comes at a time when cryptocurrencies are hitting record highs, prompting expectations of heightened volatility and significant price shifts. This development underscores the growing demand for innovative financial instruments that can adapt to the unpredictable nature of the crypto markets.
The unveiling of these futures contracts follows a period of intense volatility in the crypto sector, highlighted by a spike in the Crypto Volatility Index (CVI) in March 2024. This index, often referred to as the “market fear index,” reflects the expected volatility over the coming month and reached a peak of 85 points, signaling widespread anticipation of market fluctuations.
