By LedgerX has been blowing up on the web recently. The cryptocurrency asset managed recently announced their very first Bitcoin (BTC) volatility index. According to news outlets, LedgerX announced a new index which will track Bitcoin (BTC)’s volatile price swings.
Ledger X is currently regulated by the US Commodities Futures Trading Commission (CFTC).
The published report divulges that the LedgerX Volatility Index or LXVX will help put the levels of fear and uncertainty found in the crypto community at ease with regards to the worrisome nature of the most popular digital currency around. Thus, it could also be dubbed as the “Bitcoin Fear Index” if you will.
Much like VIX is hailed as the stock market fear index by market commentators. LedgerX will collate data for LXVX from the many bitcoin options which it already provides to its users.
LedgerX Co-Founder on LXVX:
COO of Ledger X, Juthica Chou claims that their index will assist investors and traders with the ability to oversee any risks pertaining to BTC’s volatility. Paul Chou, the CEO of LedgerX stated that a volatility index for BTC had been part of their initial business strategy for the past five years. He went on to add that once they entered a market which they were truly happy with they decided to launch LXVX. Furthermore, Chou went on to explain that their index would provide indications on how much BTC could potentially move to the upside or downside in the upcoming weeks.
LXVX will to a degree show how traders could gain or lose money on their cryptocurrency investment. He went on to add that it could be essential for any crypto investors or institutions who are potentially seeking to enter the crypto market. Despite the current levels of pandemonium found in the US equity markets, Paul believes that his index reveals that BTC is still three times as volatile as that of the stock market. He ended by stating that at present, Bitcoin’s volatility could be the reason that many major firms are reluctant to invest in the market.
Chou added:
“I think those large, extreme drops followed by staircase moves up will moderate over time,”
Building Derivatives:
Chou also claims that the firm will not be charging firms or individual traders to use their index. However, they might be looking into building other products which will be tied to the index. For example, the creation of new derivatives:
“We could roll out a VIX product for bitcoin that could be the first of many tradable products tied to the crypto’s price swings.”
Over at the stock market, traders are allowed to trade VIX futures and options allowing investors to bet on volatility. Currently, there are also a number of ETF products tied to the VIX. However, it must be noted that both the SEC and CFTC in the past have conducted reviews of these products after a massive spike in volatility occurred in February 2018 which resulted in investors losing billions of dollars.
Could LegerX’s LXVX be the saving grace that our beloved, volatile BTC needs? Let us know your thoughts by leaving a comment below.
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