Crypto derivatives platform Bitfinex announced the launch of perpetual volatility futures on Bitcoin (BTC) and Ethereum (ETH) linked to volatility indices.
Traders on the Bitfinex Derivatives platform will be able to bet on the expected price volatility of major cryptocurrencies. The futures are being launched thanks to the Bitfinex platform's collaboration with Volmex Global.
According to CoinDesk, trading of the aforementioned futures will be linked to the Bitcoin Volmex Implied Volatility Index (BVIV) and the Ether Volmex Implied Volatility Index (EVIV) of the decentralized derivatives platform Volmex.
These two indices track the potential volatility of digital assets over a 30-day period, following the methodology of the Volmex Implied Volatility Indices (BVIV and EVIV). Their values are formed based on call and put options on BTC and ETH at a given time.
According to Volmex, the two indices are similar to Wall Street's fear indicator, the VIX, which is calculated from the options market linked to the S&P 500 index.
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Bitfinex users will be able to trade bitcoin and ethereum volatility futures under the tickers BVIVF0:USTFO and EVIVFO:USDTFO starting April 3. These contracts are denominated and pegged to USDT, the largest stablecoin. Both contracts can be traded with 20x leverage.
Perpetual contracts are futures contracts with no expiration date and a funding rate mechanism that helps synchronize the prices of perpetual contracts with the underlying asset/index. For example, the BVIV index tends to be negatively correlated during times of fear, which is why it is called the "Bitcoin Fear Index." When there is increased demand for bitcoin, during a "greed-dominated period," the BVIV increases.
With the addition of a new tool, Bitfinex users will be able to place bets on how quickly expected bullish or bearish price movements in Bitcoin and Ethereum will occur. Long volatility refers to a bet that the price of an asset can move sharply in either direction.
Volatility futures will help traders react to important news that may affect changes in the direction of movement of major cryptocurrencies, particularly the release of U.S. economic data, the Fed's interest rate decision, and crypto market news.
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