Bitfinex Derivatives, a platform under iFinex Financial Technologies Limited, is expanding its product lineup by introducing two innovative perpetual futures contracts centered around volatility. These newly launched contracts, namely the Bitcoin Implied Volatility Index (BVIVF0:USTF0) and the Ethereum Implied Volatility Index (EVIVF0:USTF0), are designed to gauge the market’s sentiment regarding future price movements of the top two cryptocurrencies.
In contrast to conventional futures contracts that directly track the price of the underlying asset, these novel contracts prioritize implied volatility, a metric derived from options pricing. Implied volatility essentially reflects the market’s expectations regarding the degree of price fluctuations expected for an asset within a specified period. Put simply, the BVIV and EVIV contracts empower traders to speculate on whether the market anticipates significant price swings (indicating high volatility) or relatively stable conditions (indicating low volatility) for Bitcoin and Ethereum in the upcoming weeks.
Volatility futures contracts for Bitcoin and Ethereum now provide leverage of up to 20x.
The newly introduced volatility futures contracts by Bitfinex Derivatives utilize the Volmex Implied Volatility indices, which specifically monitor the 30-day expected volatility for Bitcoin and Ethereum. This innovative approach enables traders to tap into market sentiment without directly engaging in the buying or selling of Bitcoin or Ether.
One of the key features of these contracts is the provision of up to 20x leverage by Bitfinex Derivatives. This level of leverage can potentially amplify profits for traders who are seasoned and comfortable with the associated risks. It offers a strategic tool for experienced traders to capitalize on anticipated price movements in the crypto market.
Bitfinex Derivatives highlighted the significance of these new volatility indices in providing traders with a fresh perspective on market sentiment and the potential for profit. By incorporating volatility indexes, traders gain insights into shifts in market mood, which can inform their trading decisions.
Volatility indexes typically exhibit a negative correlation with the underlying asset’s price. This means that during periods of significant price declines in Bitcoin or Ether, the volatility index tends to rise, reflecting heightened market uncertainty. Conversely, when prices stabilize, volatility readings tend to decrease. Moreover, unexpected market events can lead to sharp spikes in volatility indexes, indicating sudden shifts in market sentiment.
The BVIVF0:USTF0 and EVIVF0:USTF0 contracts are slated to become available for trading on Bitfinex Derivatives starting April 3rd, 2024. However, it’s worth noting that as per the exchange’s terms of service, US customers are not permitted to hold derivatives accounts on the platform, emphasizing the need for compliance with regulatory requirements.
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