Crypto derivatives exchange Deribit will soon launch Bitcoin (BTC) volatility futures, giving investors a direct way to measure and trade BTC market volatility.
On March 17, Deribit introduced BTC DVOL futures, a derivative contract based on Deribit’s Bitcoin Volatility Index, which measures the implied volatility of the largest cryptocurrency. Deribit’s Volatility Indicator provides a 30-day outlook on investors’ annualized volatility expectations.
Like other volatility products, BTC DVOL can potentially help traders with risk management, portfolio hedging, or market speculation.
Volatility as an asset is widely traded in traditional finance, with the most popular product being the Chicago Board Options Exchange’s Volatility Index, also known as the VIX. The VIX fluctuates on a scale of 1 to 100, where 20 represents the historical average. Readings below 20 indicate lower implied volatility than the historical average. Readings above 20 are generally associated with more turbulent financial conditions, while anything above 30 indicates significant market volatility, typically due to investor uncertainty, risk, or fear.
VIX measures the volatility of options on the S&P 500 Index, a leading indicator of the US stock market.
Bitcoin and the broader crypto markets have exhibited extreme volatility over the past 12 months. The period known as the crypto winter is usually associated with deep corrections in the prices of digital assets following an overextended bullish phase.
Related: Crypto Acted As Safe Haven Amid SVB And Signature Bank Run: Cathie Wood
Although crypto investment products saw record outflows last week following the collapse of Silicon Valley Bank and Signature Bank, regulatory clarity on investor deposits has helped Bitcoin stage a big relief rally. The Bitcoin price crossed $27,000 on March 17 for the first time in over nine months.
