Bitcoin fear gauge begins trading for the first time

Bitcoin Fear

Guess there’s a first time for everything! A Bitcoin fear gauge called the T3i BitVol Index saw its first trades on Wednesday. It is designed to measure the volatility of the cryptocurrency.

The index is similar to the Cboe Volatility Index (VIX) investors use to gauge volatility in the stock market.

The T3i BitVol Index measures the expected 30-day implied volatility in Bitcoin derived from tradable option prices of the crypto. The idea behind this service was to help investors make more informed trading decisions.

Launched in July 2020 by T3 Index, a research-driven financial firm, a separate index for Ethereum is also maintained. This index is model-free and uses the variance swap methodology. It is also designed to use the full range of option strikes to best capture the market outlook on expected volatility.

Bloomberg reports that the debut transaction off the T3i BitVol Index consisted of a March expiry 1-by-2 call spread that was bought for zero cost. Quantitative crypto assent management firm LedgerPrime was the market-maker, and a leading global macro crypto asset manager is the counterparty.

Simon Ho, the chief executive officer of T3 Index notes that crypto investors will now be able to trade volatility as a distinct asset class.

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