Cryptocurrency exchange Bitfinex has unveiled its latest trading tools to address the recent surge in volatility across crypto markets. In response to this trend, Bitfinex is rolling out new Bitcoin and Ether volatility futures.
Expanding Trading Options
Bitfinex’s derivatives platform, Bitfinex Derivatives, offered by iFinex Financial, has announced the launch of two perpetual futures contracts. These contracts are based on the Volmex Implied Volatility indexes: the Bitcoin Implied Volatility Index (BVIV) and Ethereum Implied Volatility Index (EVIV). These indexes track the 30-day expected volatility or implied volatility of BTC and ETH options contracts.
Jag Kooner, Bitfinex’s head of derivatives, highlighted the significance of these indices, emphasizing that they enable customers to not only monitor but also trade the implied volatility of Bitcoin and Ether in a straightforward perpetual format.
Perpetual futures, also referred to as perpetual swaps, are derivative contracts that enable traders to speculate on the future price of an asset without any expiration date. Kooner emphasized their popularity, describing them as the “most tradable format in the crypto space” due to their timeless structure.
These new contracts complement Bitfinex’s existing range of over 60 perpetual futures contracts, which cover not only cryptocurrencies but also commodities like precious metals and oil, FX, and equities. Kooner highlighted that these additions will introduce implied volatility as another asset class for trading.
In options trading, implied volatility indicates the market’s expectation regarding an asset’s price movement over a specific period. If investors anticipate significant fluctuations, volatility increases, while expectations of subdued price movements lead to a decrease in volatility.
Bitfinex’s Response to Market Conditions
Kooner explained that the introduction of these new trading tools coincides with the surge in cryptocurrency prices, necessitating enhanced risk management measures. With many cryptocurrencies reaching new all-time highs, the likelihood of increased volatility and significant market fluctuations has risen.
The announcement follows a period of unprecedented volatility in March 2024, with the Crypto Volatility Index (CVI) reaching a record high of 85 points on March 11. The CVI tracks 30-day future volatility and serves as a key indicator of market sentiment within the crypto space.
