Bet on Bitcoin Volatility: Deribit Launches BTC Futures

• Deribit crypto derivatives exchange is launching Bitcoin volatility futures.
• The product will measure the implied volatility of the largest cryptocurrency.
• It will help traders with risk management, portfolio hedging or market speculation.

Deribit Launches Bitcoin Volatility Futures

Deribit, a crypto derivatives exchanges, has announced the launch of Bitcoin (BTC) volatility futures, which will measure the implied volatility of the world’s largest cryptocurrency. The product will enable investors to hedge their portfolios and speculate on BTC market movements by trading the futures contract based on the Deribit Bitcoin Volatility Index (DVOL).

What are Volatility Products?

Volatility products are popular tools used in traditional finance for portfolio hedging, risk management and speculation. The most widely traded product is known as VIX — an index created by Chicago Board Options Exchange that measures implied volatility of S&P 500 options. Readings above 20 usually indicate turbulent financial conditions due to uncertainty or fear amongst investors. Traditional markets have experienced extreme volatility over the past 12 months due to massive fluctuations in stock prices.

Crypto Winter and Relief Rally

Similarly, crypto markets have also exhibited extreme levels of volatility over the past year during what is commonly known as ‘crypto winter’ — a period marked by deep corrections in digital asset prices following an extended bull run. Last week saw record outflows from crypto investment products amid reports of Silicon Valley Bank and Signature Bank running into trouble, but regulatory clarity on investor deposits has helped boost BTC prices above $27k — a level it hasn’t seen since nine months ago.

How Will DVOL Help Investors?

By providing a 30-day outlook on investor expectations for annualized volatility, DVOL can be used to help traders manage risks associated with volatile markets while also allowing them to speculate on price movements through derivatives contracts priced against it. As such, it provides traders with yet another tool in their arsenal when trading cryptocurrencies or other digital assets.

Conclusion

Bitcoin’s recent rebound over $27k signals renewed optimism around digital asset investing despite turbulent conditions elsewhere in global markets caused by uncertainty and fear among investors about the future direction of stocks and other asset classes. With Deribit’s new offering, traders now have more options at their disposal when looking to protect their portfolios from market instability or take advantage of price movements through speculation using derivatives contracts built on its Bitcoin Volatility Index (DVOL).