Bitfinex, a cryptocurrency exchange, is expanding its trading tools in response to a spike in volatility in the crypto markets. They have introduced new Bitcoin (BTC) and Ether (ETH) volatility futures to their derivatives platform, Bitfinex Derivatives. These futures contracts are based on the Volmex Implied Volatility indexes, which track the expected volatility of BTC and ETH options contracts over a 30-day period.
According to Jag Kooner, the head of derivatives at Bitfinex, the creation of these indices allows 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 or perpetuals, are derivative contracts that allow traders to speculate on the future price of an asset without an expiration date.
Kooner believes that perpetual futures are the most tradable format in the crypto space, as they do not rely on a dated structure like other contracts. With the addition of these new contracts, Bitfinex now offers over 60 perpetual futures contracts, including cryptocurrencies, commodities, FX, and equities. Kooner stated that these new contracts will allow them to add implied volatility as another asset class.
The introduction of these new trading tools is a response to the recent surge in cryptocurrency prices. In March 2024, cryptocurrency volatility reached all-time highs, with the Crypto Volatility Index (CVI) peaking at 85 points on March 11. This was just two days before Bitcoin reached its historic highs above $73,000 on March 13. Currently, the implied crypto volatility measured by CVI is around 76.
In summary, Bitfinex is expanding its trading tools by introducing new Bitcoin and Ether volatility futures. These futures contracts are based on the Volmex Implied Volatility indexes and allow traders to speculate on the future price of these cryptocurrencies. This move comes in response to the increased volatility in the crypto markets and the rising prices of cryptocurrencies.