CME Group, based in Chicago, has launched a new collection of cryptocurrency benchmarks aimed at delivering standardized pricing and volatility insights for institutional traders utilizing familiar tools from traditional asset classes.
Released on Tuesday, the CME CF Cryptocurrency Benchmarks encompass various digital assets, such as Bitcoin (BTC), Ether (ETH), Solana (SOL), and XRP (XRP).
A key feature of the launch is the CME CF Bitcoin Volatility Benchmarks, which monitor the implied volatility of Bitcoin and Micro Bitcoin Futures options, providing a crypto-market counterpart to the equity market’s VIX by indicating the expected price movements over the next 30 days.
Volatility benchmarks are critical in traditional markets, allowing traders to measure uncertainty. They are essential for options pricing, provide protection against sudden market fluctuations, support volatility-based strategies, and act as real-time indicators of market apprehension.
According to the announcement made on Tuesday, the CME CF Bitcoin Volatility Index is not an actively tradable contract; rather, it functions as a standardized reference for pricing and risk assessment.
Related: CME reignites ETH ‘super-cycle’ discussion as Ether futures volume exceeds Bitcoin
Increasing Crypto Options Market Activity
Institutional interest has steadily grown within the cryptocurrency market, propelled by the rise of spot exchange-traded funds (ETFs) and the ongoing expansion of futures and options trading.
While crypto derivatives have existed prior to ETFs, the sector has received less attention in light of significant inflows into Bitcoin-related funds.
Nevertheless, the third quarter experienced a notable surge in institutional derivatives activity on CME, with total futures and options volume hitting a record high of over $900 billion.
The quarter concluded with an unprecedented average daily open interest of $31.3 billion across CME’s futures and options contracts. This is a vital indicator since open interest represents the capital actively engaged in the market, rather than merely short-term trading turnover. An increase in open interest often signals enhanced liquidity and greater institutional confidence.
Moreover, derivatives activity expanded beyond Bitcoin to include Ether, Ethereum’s native token, with a significant rise in trading of Ether and Micro Ether futures.
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