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Bitfinex Derivatives, the derivatives arm of cryptocurrency exchange Bitfinex, has announced a new investment option that allows investors to take positions by speculating on the volatility of the two largest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH). Accordingly, the cryptocurrency exchange has launched perpetual futures linked to Bitcoin and Ethereum volatility indices provided by Volmex Finance. These indices, derived from real-time options data, show the expected price turbulence over a 30-day period, similar to Wall Street’s fear gauge, the VIX index of the S&P 500.
Trading Era Tied to Bitcoin and Ethereum Volatility Begins
Starting today, Bitfinex users can trade margined and settled BTC and ETH volatility futures with value pegged to the largest stablecoin, Tether (USDT). The new perpetual futures contracts, trading under the symbols BVIVF0:USTFO and EVIVFO:USDTFO, offer investors the opportunity to take positions by speculating on the speed and intensity of potential price movements of Bitcoin and Ethereum without an expiration date.
Investors can take long or short positions based on volatility. Bitfinex Derivatives’ latest products offer investors the option to trade on events that could increase market volatility, such as US economic data releases, Fed interest rate decisions, and cryptocurrency-specific events.
Perpetual futures contracts, a type of derivative, will have a funding rate mechanism that helps to align prices with the underlying asset/index.
Following the Lead of Other Cryptocurrency Exchanges
Bitfinex’s move to open volatility-linked perpetual futures contracts for Bitcoin and Ethereum follows other leading cryptocurrency exchanges, such as Deribit, which opened standard perpetual futures contracts linked to the Bitcoin volatility index DVOL a year ago.
The availability of volatility-linked perpetual futures contracts broadens the range of trading strategies accessible to both individual and institutional investors, enabling them to more efficiently benefit from expected changes in market volatility.
Due to the inherently high volatility in the cryptocurrency market, derivative products like volatility-linked perpetual futures contracts provide investors with an additional option to manage risk and capture various earning opportunities.
