The Chicago-based CME Group has launched a brand new suite of cryptocurrency benchmarks designed to offer standardized pricing and volatility information for institutional merchants utilizing instruments they’re acquainted with throughout conventional asset courses.
Introduced Tuesday, the CME CF Cryptocurrency Benchmarks cowl a variety of digital property, together with Bitcoin (BTC), Ether (ETH), Solana (SOL) and XRP (XRP).
Notably, the launch consists of the CME CF Bitcoin Volatility Benchmarks, which observe the implied volatility of Bitcoin and Micro Bitcoin Futures choices, successfully serving as a crypto-market equal of the fairness market’s VIX by displaying how a lot value motion merchants count on over the subsequent 30 days.
Volatility benchmarks have lengthy performed a central position in conventional markets, permitting merchants to quantify uncertainty. They underpin choices pricing, allow safety towards sharp market swings, assist volatility-based methods and function real-time gauges of market concern.
Primarily based on Tuesday’s launch, the CME CF Bitcoin Volatility Index shouldn’t be a immediately tradable contract; as an alternative, it serves as a standardized reference level for pricing and danger administration.
Associated: CME rekindles ETH ‘super-cycle’ debate as Ether futures quantity tops Bitcoin
Crypto choices market exercise grows
Institutional demand has change into a gentle pressure within the cryptocurrency market, pushed each by the surge in spot exchange-traded funds (ETFs) and the continued growth of futures and choices buying and selling.
Whereas crypto derivatives lengthy predate ETFs, the house has drawn much less consideration amid huge inflows into Bitcoin funds.
Nonetheless, the third quarter marked a interval of speedy development for institutional derivatives exercise on CME, with mixed futures and choices quantity reaching a document excessive of over $900 billion.
The quarter ended with a document common each day open curiosity of $31.3 billion throughout CME’s futures and choices contracts. This is a crucial sign as a result of open curiosity displays the quantity of capital that is still actively dedicated to the market, not simply short-term buying and selling turnover. Rising open curiosity sometimes factors to deeper liquidity and larger institutional conviction.
Derivatives exercise additionally broadened past Bitcoin to incorporate Ether, Ethereum’s native token, with buying and selling in Ether and Micro Ether futures climbing sharply.
Journal: Massive Questions: Did a time-traveling AI invent Bitcoin?