New LedgerX Volatility Index (LXVX) Helps Investors Track Expected Bitcoin Price Movements
The instability of Bitcoin is as worrisome to the traders as it is to investors. Many potential investors refuse to trade for this simple reason. It is because of this that LedgerX has decided to create a “tracker” that helps to track and anticipate fluctuations.
The LedgerX Volatility Index (LXVX), as announced on Monday by the company, will be used to predict the possible flux of bitcoin. This will be done by analyzing information from regulated bitcoin options from many different institutions.
President and Chief Risk Officer at LedgerX, Juthica Chou, has explained that the LXVX is an important tool very similar to the Volatility Index (VIX) which is used by stock market stakeholders to measure and manage risk due to the volatility also present in the stock market.
Chou has experience in the stock market as a volatility trader with Goldman Sachs and is using this experience to help the bitcoin market.
Why LXVX Is Important.
According to Chou, LXVX is very important because it reduces risk and also encourages a more robust and participatory market. She made a comparison between the bitcoin market at the end of 2018 and the current status now in early 2019. She said,
“If you look basically since the start of the year, the LXVX is down about 20 percent so it’s down to about 68, and this is still approximately three times the volatility of the stock market but it’s very telling in the bitcoin space because it shows that there is less of the fear and uncertainty than what existed December.”
Currently, The LXVX is not yet tradeable. However, a product that will be is a possibility in the near future.
For a long time, the crypto market suffered an uncomfortable bear market but LedgerX seems to have risen well above the situation. Calculating from commencement in October 2017, the company currently boasts of clearing well over $500 million in bitcoin derivatives through over 50,000 contracts. Chou said there were
“a lot of put options trading in December and the end of November while the broader market was selling off. Now that we’re bouncing back, we’re seeing a lot more call options.”
Chou is very optimistic about the future of LedgerX and how well they can thrive using the index, despite the crypto bear market. The company hopes to pull more and more numbers over time with their new innovation.