CME Bitcoin Volatility index futures began trading last week, offering investors a new way to trade and hedge price volatility. DV Chain and Monarq Asset Management executed the first block operations, starting the negotiation of the contracts.
These volatility contracts track the CME CF Bitcoin Volatility Index (BVX), which represents the market expectations for Bitcoin volatility over four weeks. Its debut allows traders to take positions directly on expected price turbulence rather than simply price direction.
That distinction is important because most derivatives, including futures, perpetual futures, and options, require a view of where the price is headed. Volatility futures eliminate that complexity, allowing traders to express an opinion solely on how BTC will move in any direction.
This opens the door to a new set of portfolio and hedging strategies that were previously difficult to execute in regulated settings. Think about positioning yourself for how much bitcoin could move based on events like this week’s US inflation data – traders can go long or short on volatility depending on their outlook.
Monarq CEO Shiliang Tang called the launch a positive step in expanding regulated volatility offerings.
“As Bitcoin continues to mature into a more mainstream institutional asset class, demand for sophisticated risk management instruments grows along with it. Robust tools like CME Group’s Bitcoin Volatility Futures are exactly what investors need to accurately express their market views and efficiently hedge their portfolios within a secure and transparent framework,” he said in the press announcement.
Monarq Asset Management is an institution-focused company Quantitative and systematic investment firm in digital assets managed by former executives of firms such as LedgerPrime, Tower Research and BlockTower Capital. DV Chain is a liquidity and market making service provider.
The launch of volatility futures expands CME’s existing product suite comprising standard and options contracts and bitcoin and ether microfutures. The platform’s crypto derivatives business has reached approximately 266,900 contracts so far this year, up 38% year-over-year, while average daily open interest stands at approximately 274,500 contracts, up 18%.
