By
Temitope Olatunji
April 19th, 2024
Bitfinex will provide perpetual contracts to traders 24 hours a day seven days a week, unlike equity exchanges that are open for business five days a week.
Cryptocurrency exchange Bitfinex with stablecoin project Tether (USDT), will now enable its customers to track Europe 50 (EUROPE50IXF0: USTF0) and Germany 30 (GERMANY30IXF0: USTF0) through perpetual contracts.
“This is the first time that an exchange from the digital asset space has launched a product that bridges the gap with traditional stock markets, representing a significant milestone in the evolution of crypto as an established asset class,” said Paolo Ardoino, CTO at Bitfinex Derivatives.
With Bitfinex deploying its efficient blockchain technology, it will significantly assist retail and institutional investors access traditional stock markets with much ease.
“High-frequency traders account for about 80% volume on our platform. We are attuned to their requirements and see this offering as being able to enhance cross-asset trading strategies,” Ardoino told The Block.
Bitfinex and Perpetual Contracts
The German 30 or popularly known as DAX stock Index is a stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. Notably, the German 30 companies represent approximately 75% of the aggregate market capitalization that trades on the Frankfurt Exchange.
Bitfinex is eyeing on tapping on the high liquidity in the German top companies that attracts investors from all corners of the globe.
On the other hand, the Dow Jones STOXX 50 or the Europe 50, is a stock index that represents 50 of the largest companies in Europe based on market capitalization. Having been created back in 1998, Europe 50 is reconstituted annually, and weightings are adjusted quarterly to account for proportional changes in underlying company market caps.
By definition, a perpetual contract is a special derivative product where two traders can agree to either buy or sell the underlying asset at a predetermined price in the future.
Bitfinex will provide perpetual contracts to traders 24 hours a day seven days a week, unlike equity exchanges that are open for business five days a week.
“Over the weekend, we may reasonably expect lower volumes than on weekdays in the normal course of a business unless there are significant economic developments over the weekend, such as a central bank policy shift, etc,” Bitfinex told CoinDesk in an email.
The company has chosen Tether coin to keep the prices stable, whereby it will put a +/-5% cap on the final mark price from 4:30 PM UTC until 8:00 AM UTC on the following day.
With several aspects of the blockchain and its interoperability with the traditional market still not fully harnessed, Bitfinex is aiming to venture and take over the traditional stock perpetual contract market.
“CME moved into crypto with bitcoin futures. Now Bitfinex is moving into conventional markets,” Ardoino explained.