Hedging on Fears: New Crypto Volatility Index Let Traders Bet on Market Turbulence
Over the years, since Crypto investing became more mainstream, we have seen the creation of futures contracts, funds, and now Volatility indices.
The Blockchain-powered Fintech startup company, COTI, has announced the launch of a brand new cryptocurrency index, which allows traders to bet on the likelihood of shorter/longer-term market volatility. At this stage, traders are able to open positions by depositing and using the Tether stablecoin (USDT).
With the popularity of indices like futures, which allow investors to bet against a digital asset's long-term performance, the introduction of a volatility index shouldn't be so surprising. The Gibraltar-based company explained that “Users who expect volatility to increase can open a CVI position. If correct, they can take profit by selling their position once the index has risen.” However, if traders correctly anticipate low volatility, they can profit by collecting fees from other traders that opened positions.
In a sense, COTI helps to bring more liquidity to the crypto market.
To avoid overly febrile activity on the platform, CVI liquidity providers will need to deposit and hold USDT for at least 72 hours. Once any position is opened, a CVI trader must keep it open for 6 hours before it can be closed or sold.
For the moment, aspiring traders can link to COTI's CVI through major wallets such as MetaMask and TrustWallet. COTI intends to add digital assets like Ethereum (ETH) and its native COTI Token in the future.