A Volatility Index for the Crypto Markets: Digital Currency Labs' Ron Quaranta Shares Vision
Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term's Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term has made it a popular choice among many ambitious traders looking to capitalize upon its price swings, as evidenced by the proliferation of dozens of crypto exchanges.
For some, the more volatility the better. Others would sleep better at night if they could find a way of hedging. Long-term investors and those gaining direct or indirect exposure often fall into the second camp.
Bitcoin derivatives are naturally the next step for some investors. Indeed, the past few months have witnessed some surprisingly strong progress in this area. Tera Exchange's Bitcoin derivative platform was approved by the US Commodity Futures Trading Commission (CFTC), and IG Group's Nadex plans to offer bitcoin-based binary options to US clients, subject to CFTC approval.
The inherent volatility and ongoing development of derivative products make the industry ripe for some equivalent of a VIX index. The VIX is a popular metric tracking the implied volatility of S&P index options. It helps traders gauge the current state of volatility. Derivative products built on the index can be employed to hedge against exposure to increased volatility.
Digital Currency Labs (DCL), in conjunction with Emercor, has been working on such an index specifically for digital currency markets. Set to launch in January, "The xBVIX® will function as a key measure of market expectations of near-term volatility calculated using real-time global Bitcoin prices from multiple exchanges," according to a press release.
Speaking to DC Magnates, DCL CEO Ron Quaranta described how increasing traction with the CFTC and the maturing industry will increase his index's appeal:
"CFTC approval for bitcoin derivatives will be a key component for the expansion of BTC trading in the financial markets, and would be another tool in the arms of financial professionals, along with volatility measures. That said, a volatility index will have a series of other use cases in the marketplace that are not predicated on the existence of CFTC sanctioned BTC derivatives. From discussions with clients and market participants, we are confident in the xBVIX uptake."
Emercor's experience in index calculation and data sourcing was key to developing a patented metric.
Quaranta plans on aggregating price quotes from the five-to-ten-most liquid exchanges. He added that he is in active discussions with a number of industry players on both publishing the index and building derivative products based on it.
There are also plans to eventually monetize the index, with pricing envisioned to reflect its added value for investors. Early adopters would receive preferential rates.
As to whether other digital currencies such as Litecoin and Dogecoin will be supported, Quaranta said he is quite open if there is a market demand.
Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term's Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term has made it a popular choice among many ambitious traders looking to capitalize upon its price swings, as evidenced by the proliferation of dozens of crypto exchanges.
For some, the more volatility the better. Others would sleep better at night if they could find a way of hedging. Long-term investors and those gaining direct or indirect exposure often fall into the second camp.
Bitcoin derivatives are naturally the next step for some investors. Indeed, the past few months have witnessed some surprisingly strong progress in this area. Tera Exchange's Bitcoin derivative platform was approved by the US Commodity Futures Trading Commission (CFTC), and IG Group's Nadex plans to offer bitcoin-based binary options to US clients, subject to CFTC approval.
The inherent volatility and ongoing development of derivative products make the industry ripe for some equivalent of a VIX index. The VIX is a popular metric tracking the implied volatility of S&P index options. It helps traders gauge the current state of volatility. Derivative products built on the index can be employed to hedge against exposure to increased volatility.
Digital Currency Labs (DCL), in conjunction with Emercor, has been working on such an index specifically for digital currency markets. Set to launch in January, "The xBVIX® will function as a key measure of market expectations of near-term volatility calculated using real-time global Bitcoin prices from multiple exchanges," according to a press release.
Speaking to DC Magnates, DCL CEO Ron Quaranta described how increasing traction with the CFTC and the maturing industry will increase his index's appeal:
"CFTC approval for bitcoin derivatives will be a key component for the expansion of BTC trading in the financial markets, and would be another tool in the arms of financial professionals, along with volatility measures. That said, a volatility index will have a series of other use cases in the marketplace that are not predicated on the existence of CFTC sanctioned BTC derivatives. From discussions with clients and market participants, we are confident in the xBVIX uptake."
Emercor's experience in index calculation and data sourcing was key to developing a patented metric.
Quaranta plans on aggregating price quotes from the five-to-ten-most liquid exchanges. He added that he is in active discussions with a number of industry players on both publishing the index and building derivative products based on it.
There are also plans to eventually monetize the index, with pricing envisioned to reflect its added value for investors. Early adopters would receive preferential rates.
As to whether other digital currencies such as Litecoin and Dogecoin will be supported, Quaranta said he is quite open if there is a market demand.