Bitcoin Volatility Index 'BitVol' Makes First Trade
The BitVol index level puts the cryptocurrency's annualized volatility at 100%.
Mar 17, 2021 at 5:08 p.m. UTCUpdated Aug 19, 2021 at 8:07 a.m. UTC
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A new bitcoin (BTC) “fear gauge” began trading last week. The T3i BitVol Index from T3 Index, a financial indexing firm, measures the 30-day implied volatility of bitcoin.
The index offers cryptocurrency investors the ability to “trade volatility as a distinct asset class,” said Simon Ho, CEO of T3 Index.
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- The BitVol index has settled around an annualized 100% after reaching a high near 170% on January 15, which preceded a roughly 20% price correction in bitcoin.
- Elevated volatility could be a signal of investor fear or uncertainty, while low levels of volatility signal investor complacency.
- The first options trade off the BitVol Index was initiated on March 10, consisting of a March expiry 1-by-2 call spread that was bought for zero cost, Bloomberg reported.
The BitVol Index uses strike prices from tradable bitcoin options across various exchanges, a similar methodology applied by the Chicago Board of Trade’s (CBOE) VIX Index, which investors use to track volatility in the stock market.
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Other cryptocurrency volatility indices are widely tracked, such as the BitMEX Daily Historical Bitcoin Volatility Index (.BVOL24H).
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