Crypto Derivatives Exchange Deribit to Launch Bitcoin Soon Volatility futures, which provide investors with a direct way to measure and trade volatility in the BTC market.
On March 17, Deribit launched BTC DVOL futures a derivatives 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 of investors' annualized volatility expectations.
Like other volatility products, BTC DVOL can 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 Cboe Volatility Index, also known as the VIX. The VIX fluctuates on a scale of 1-100, with 20 representing the historical average. A reading below 20 indicates that implied volatility is below historical averages. Readings above 20 are generally associated with more volatile financial conditions, while readings above 30 indicate significant market volatility, usually due to uncertainty, risk or investor fear.
VIX measures the volatility of options on the S&P 500 Index, a leading indicator for U.S. stocks. Bitcoin and the broader crypto market have exhibited extreme volatility over the past 12 months. Periods known as cryptocurrency winters are often associated with deep corrections in digital asset prices following overly extended bullish phases. While crypto investment products experienced record outflows last week in the wake of the collapse of Silicon Valley Bank and Signature Bank, clarity over investor deposit regulation helped bitcoin stage a sharp rally. On March 17, the price of Bitcoin broke through $27,000 for the first time in more than nine months.
