Bitfinex Derivatives has expanded its trading portfolio by introducing perpetual futures linked to the volatility of bitcoin (BTC) and ether (ETH). These innovative financial instruments are based on Volmex Finance’s proprietary bitcoin implied volatility index (BVIV) and ether implied volatility index (EVIV), offering traders the opportunity to speculate on the expected price fluctuations of the two leading cryptocurrencies.
A New Avenue for Traders
The newly launched futures contracts are analogous to the VIX index, often referred to as Wall Street’s “fear gauge,” which measures market volatility expectations based on S&P 500 index options. Similarly, the BVIV and EVIV are derived from real-time call and put options for bitcoin and ether, projecting the anticipated price movements over a 30-day period.
Trading Details
Starting from April 3, Bitfinex users have been able to trade these volatility futures using the ticker symbols BVIVF0:USTFO and EVIVFO:USDTFO. These contracts are denominated, margined, and settled in Tether (USDT), the world’s most widely used dollar-pegged stablecoin. As perpetual futures, these contracts lack an expiration date, utilizing a funding rate mechanism to align perpetual prices closely with the underlying asset or index.
Strategic Implications
Bitfinex’s volatility futures allow traders to hedge against or speculate on the speed and direction of price movements for bitcoin and ether. Whether expecting bullish surges or bearish downturns, traders can position themselves to potentially profit from significant price volatility in either direction.
Expanding Market Tools
The launch of these volatility futures on Bitfinex provides traders, especially those without the means or know-how to employ complex options strategies, with straightforward instruments to benefit from changes in implied volatility. This move by Bitfinex follows a similar initiative by Deribit, the leading crypto options exchange, which introduced standard futures contracts tied to its bitcoin volatility index a year prior.
By offering these volatility futures, Bitfinex Derivatives enhances its product lineup, addressing the needs of traders looking to navigate the often unpredictable and volatile cryptocurrency market. This addition underscores the growing interest in sophisticated trading tools within the crypto finance space, offering new ways for market participants to engage with digital asset volatility.
