Crypto Derivatives Trade LedgerX and Choices Benchmarking Specialist T3 Suggest New Bitcoin (BTC) Volatility Index

LedgerX, a regulated cryptocurrency derivatives trade, shall be partnering with T3 with a view to launch a brand new Bitcoin (BTC) volatility index. Zach Dexter, CEO at LedgerX, mentioned that, initially, the index will simply be a reference for digital asset merchants.

LedgerX and T3, a research-focused monetary indexing firm, specializing in volatility and choice benchmarking, are planning to commercialize the index, which is topic to regulatory approval. If authorized, the BTC volatility index can be tradable in a way that’s considerably just like Wall Road’s VIX index.

The LedgerX staff famous on July 10, 2020 that their new BitVol Index has been developed with help from a Chicago-headquartered choices venue and T3 Index, a longtime supplier of options-based indices.

BitVol is considerably just like Wall Road’s market concern gauge, the VIX, in that it goals to measure the 30-day implied volatility of Bitcoin (BTC), by analyzing LedgerX’s cryptocurrency market knowledge.

Notably, this isn’t the primary time that LedgerX has tried to launch a BTV volatility index. Final yr, the corporate launched the LedgerX Volatility Index (LXVX).  Nevertheless, Dexter famous that the newly proposed index shall be created by acquiring knowledge from a number of totally different sources.

The brand new BTC volatility index could also be considered on LedgerX’s platform, and also will be out there on Refinitiv‘s Eikon, a competitor to Bloomberg terminals. Choices merchants could use LedgerX’s BTC volatility index to help them whereas they conduct trades. For instance, the index could also be used to assist with shopping for calls in the event that they see a drop in BTC volatility. Name choices grow to be so much cheaper when volatility of the underlying asset drops.

Though LedgerX has managed to accumulate a big share of the comparatively small crypto derivatives market, it’s nonetheless nicely behind a few of the bigger gamers like BitMEX, CME Group, OKEx, and Deribit.

Topic to regulatory approval, T3 and LedgerX would possibly “commercialize” the BTC volatility index, which signifies that they might develop a tradable product on prime of the index. Whether it is launched, then it will reportedly be the primary of its sort within the international BTC markets.

Merchants have more and more been utilizing Wall Road’s VIX and have been exploring numerous methods involving market volatility, in accordance to a June 2020 report from The Wall Road Journal. Over a trillion {dollars} in derivatives-related bets tied to the VIX have been traded because the yr started.