Hyperliquid Opens Market for Bitcoin Volatility

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Hyperliquid has introduced perpetual futures linked to the Bitcoin Volmex Implied Volatility Index (BVIV). This allows traders, with a maximum leverage of 5x at launch, to go long or short on the expected volatility of bitcoin over 30 days.

The contracts focus on the magnitude of future price fluctuations rather than the direction of the bitcoin price. The listing was led by Markets by Kinetiq, the on-chain perpetual futures platform on Hyperliquid, in collaboration with Volmex and Perps.inc. According to CoinDesk, this is the first market rolled out jointly by these three parties.

Factual Explanation

The BVIV index tracks the expected, or implied, volatility of bitcoin in real-time over a 30-day period. The index is often referred to as a bitcoin-VIX. This designation refers to the VIX index from Cboe, which measures the expected volatility over 30 days for the S&P 500.

The new market enables direct positioning on the volatility index. According to CoinDesk, volatility views were previously mostly expressed indirectly through options. This approach can be capital-intensive and requires knowledge of derivatives.

Bitcoin Volatility Gets Its Own Perpetual Market

With the BVIV perpetual, traders can go long or short on bitcoin volatility without the contract itself following the direction of the bitcoin price. Therefore, a long or short position in this market pertains to the expected degree of price movement, not an expectation that bitcoin will rise or fall.

At launch, a maximum of 5x leverage was available. The perpetual is collateralized and denominated in USDC. Seda provides the oracle infrastructure that connects the Volmex index on-chain with the Markets exchange.

How the BVIV Perpetual Works on Hyperliquid

The BVIV index serves as the underlying reference for the perpetual contract. Through this linkage, participants can trade directly on an index that reflects the expected 30-day bitcoin volatility. This distinguishes the product from a contract that solely follows the current bitcoin price.

The construction brings a volatility index to an on-chain perpetual futures market on Hyperliquid. Markets by Kinetiq acts as the trading platform, while Volmex provides the index and Seda facilitates the connection via oracle infrastructure. The collaboration with Perps.inc is part of the joint rollout of this market.

From Index to On-Chain Derivatives Market

With the BVIV listing, Hyperliquid adds volatility indices to an existing offering of perpetuals linked to crypto, stocks, traditional indices, and commodities. According to CoinDesk, this was the first market jointly rolled out by Markets by Kinetiq, Volmex, and Perps.inc.

CoinDesk further reports that Hyperliquid has a fully diluted valuation of over $90 billion and registers billions of dollars in trading volume daily. The source describes Hyperliquid as the largest decentralized exchange for perpetual futures.

Source and Involved Parties

CoinDesk's reporting on the introduction was written by Omkar Godbole and edited by Shaurya Malwa. In that reporting, Volmex Labs founder and CEO Cole Kennelly states that the BVIV perpetual offers opportunities for hedging, speculation, and exposure to bitcoin volatility.

Justin Greenberg, co-founder and CTO of Kinetiq Markets, states according to CoinDesk that the joint rollout demonstrates how Markets by Kinetiq can work with partners that provide products while Markets offers the trading venue.

What This Does Not Mean

The introduction of BVIV perpetuals does not mean that the contract directly follows the direction of bitcoin. The product is linked to the expected magnitude of price movements over 30 days, not to an increase or decrease in the bitcoin price.

Also, the new market does not mean that bitcoin volatility was not tradable before. CoinDesk describes options as an existing way for traders to express volatility views. The new element is the joint rollout of a perpetual futures market for the Bitcoin volatility index from Volmex on Hyperliquid by Markets by Kinetiq, Volmex, and Perps.inc.