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 built on Deribit’s Bitcoin Volatility Index, which measures the implied volatility of the largest cryptocurrency. Deribit’s volatility gauge provides a 30-day outlook on investor expectations for annual volatility.
Like other volatility products, BTC DVOL has the potential to 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 Volatility Index, also known as the VIX. The VIX fluctuates on a scale of 1-100, with 20 representing the historical average. Readings below 20 signal lower volatility than historical averages. Readings above 20 are usually associated with more turbulent financial conditions; What are the top 30 signs of market volatility, usually due to uncertainty, risk, or fear of investors.
The VIX measures the volatility of S&P 500 Index options, the leading indicator of the US stock market.
Bitcoin and the broader crypto market have shown extreme volatility over the past 12 months. The period known as crypto season is usually associated with a deep correction in the price of digital assets after an extended bullish phase.
related: Crypto acts as a safe haven amid SVB and Signature bank run: Cathie Wood
Although crypto investment products experienced record outflows last week after the collapse of Silicon Valley Bank and Signature Bank, regulatory clarity on investor deposits has helped Bitcoin make a huge relief rally. Bitcoin price crossed $27,000 on March 17 for the first time in more than nine months.