Bitfinex Introduces Bitcoin and Ether Volatility Futures

Bitfinex, a cryptocurrency exchange, is expanding its trading tools in response to a recent spike in volatility in the crypto markets. The exchange has introduced new Bitcoin (BTC) and Ether (ETH) volatility futures on its derivatives platform, Bitfinex Derivatives. These futures contracts are based on the Volmex Implied Volatility indices, which track the 30-day expected volatility of BTC and ETH options contracts.

By launching these new contracts, Bitfinex aims to allow customers to not only monitor, but also trade the implied volatility of Bitcoin and Ether in a simple perpetual format. Perpetual futures, also known as perpetual swaps, are derivative contracts that do not have an expiration date, allowing traders to speculate on the future price of an asset.

Jag Kooner, Bitfinex’s head of derivatives, explains that perpetual futures are the “most tradable format in the crypto space” because they do not rely on a dated structure. This makes them accessible to both retail and institutional investors. These new BTC and ETH contracts join over 60 other perpetual futures contracts available on Bitfinex, including commodities, FX, and equities.

Kooner believes that adding implied volatility as another asset class will provide more trading opportunities for investors. Implied volatility is a metric used in options trading to measure the market’s expectation of an asset’s price movement over a certain period of time. The introduction of these new trading tools is a response to the recent surge in crypto prices and the likelihood of increased volatility and significant drawdowns.

This news follows a period of record-breaking cryptocurrency volatility in March 2024. The Crypto Volatility Index (CVI), which measures 30-day future volatility and acts as a market fear index for the crypto market, reached its all-time high of 85 points on March 11. This peak came just two days before Bitcoin reached its historic highs above $73,000 on March 13. Currently, the implied crypto volatility measured by the CVI is around 76.

Bitfinex’s expansion of trading tools aims to address the growing demand for cryptocurrency derivatives and provide investors with more opportunities to trade and speculate on the price movements of Bitcoin and Ether.