Volatility Futures: Bitfinex Unveils New Tools for Crypto Volatility Traders

Volatility Futures: Bitfinex Unveils New Tools for Crypto Volatility Traders
Volatility Futures: Bitfinex Unveils New Tools for Crypto Volatility Traders

Bitfinex, a leading derivatives platform, has unveiled two new perpetual futures contracts to track the implied volatility of Bitcoin (BTC) and Ether (ETH). These contracts are based on the Volmex Implied Volatility indexes (BVIV and EVIV), which gauge the expected 30-day volatility of BTC and ETH options contracts.

The BVIV and EVIV indices represent the first crypto volatility indices in the industry. They measure the market's expectation of future price volatility, essentially tracking market fear surrounding Bitcoin and Ether. By trading these contracts, users can speculate on the expected volatility of these assets.

Perpetual futures, unlike traditional futures contracts, do not have an expiration date, allowing traders to maintain their positions indefinitely. They are also the most traded format in the crypto space due to their flexibility. Bitfinex's new volatility futures allow users to bet on anticipated price movements, whether bullish or bearish.

The funding rate mechanism in perpetual futures helps align the prices of these contracts with the underlying asset or index (BTC and ETH in this case). By introducing these volatility futures, Bitfinex users can now speculate on the expected volatility of Bitcoin and Ether, offering a new tool for managing risk or taking leveraged positions.

Cryptocurrency volatility surged in March 2024, with the Crypto Volatility Index (CVI) reaching record highs. This spike coincided with Bitcoin hitting its all-time high above $73,000. Currently, the CVI indicates that implied crypto volatility remains elevated at around 76 points.

Bitfinex's new volatility futures contracts provide traders with a mechanism to trade the expected volatility of Bitcoin and Ether, enabling them to capture market sentiment and potentially profit from price movements driven by volatility.

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