May 31st, 2019 at 9:10 am UTC · 6 min read
BitMax.io (BTMX.com), the industry next-generation digital asset trading platform founded by a group of Wall Street quantitative veterans, has announced the launch of Volatility Card, its first volatility-linked derivative product that allows the global users to forecast and trade off 24-hour price fluctuation of underlying major coins in a simple yet effective way.
The first series of Volatility Card will be available for the trading pair of BTC / USDT on BitMax.io at 8:00 p.m. EDT, May 31st, 2019.
Volatility is a technical measure of a trading asset’s price fluctuation (either up or down) within a defined time frame. High volatility indicates large price swing within short period of time, hence higher trading risk as well as greater return potential. In traditional finance industry, many different volatility derivative products have been developed for active traders to capitalize upon the short-term trading opportunities and/or use as risk hedging mechanism, including various index-linked (such as VIX) options, futures and ETFs across major asset classes.
However, in digital asset trading space, due to its nascent nature and lack of mature market structure with regulation and institutional involvement, the market has been highly volatile with many more sharp price movements, especially in the recent months as Bitcoin leads the price recovery from its lows in the winter.
Furthermore, only handful derivative products, such as CBOE Bitcoin futures, are available to the professional traders, albeit with fairly inconsistent liquidity and infrastructure issues of settlement and clearing yet to be resolved. As a result, there is strong market demand for new type of volatility product for global users to gain exposure to the increasing volatility of underlying digital assets for enhanced risk / reward purpose.
BitMax.io Volatility Card is an innovative volatility-linked derivative product designed by Dr. George Cao, the Co-founder & CEO of the platform. It is inspired by Wall Street traditional short-term volatility products with quasi-option structure yet largely simplified payout form.
The Volatility Card, named as Turtle Card and Bunny Card after the famous Aesop’s fable – the Tortoise and the Hare, allows users to forecast and trade on 24hr-window (UTC 00:00 – 24:00) price fluctuation for the underlying trading pair. Turtle Card represents a prediction of 24-hour price movement within certain percentage range; while Bunny Card represents a prediction of 24-hour price movement above certain range.
For instance, if user expects the 24-hour price change for BTC/USDT within +/- 3%, the user should purchase Turtle Card. Otherwise, the user can purchase Bunny Card for the prediction for BTC/USDT 24-hour price movement ≥ 3%. Each card has its notional value and sale price, denominated in either USDT or BTMX, the native token of BitMax.io platform.
Users who can correctly predict the range of price movement at the end of 24-hour window will receive the reward equivalent to notional value of the card. Otherwise, the card will become invalid upon expiration.
To mitigate potential price deviation due to market volatility, BitMax.io uses composite reference price for the calculation of 24-hour price movement. The reference price is computed by taking an average of last trade price from five exchanges (upon availability at the time of computation).
Similar to all the innovative products launched on BitMax.io, introduction of this unique Volatility Card has again showcased the team’s deep understanding of inner working of capital market and their advanced expertise in financial product design. Volatility products in traditional financial market are primarily designed for institutional clients with complex structure and sophisticate risk management requirements such as initial and maintenance margin.
At current development stage of digital asset trading market, there is a strong demand for an entry-level volatility product that is easy to understand and adopt among broad-based retail and institutional users. The Volatility Card is perfectly positioned to serve this product need based upon the following three key features.
First, the 24-hour window is preset as fixed. Users only need to make decision on when to buy in, not the time of settlement.
Second, user picks the card to predict only the range (absolute value) of price movement, not the direction (up and down).
Third, the card sale price is subject to change based on real-time market condition, while the notional value for the card is preset as fixed. This design, to some extent, would mitigate pricing risk due to the time difference. In summary, BitMax.io Volatility Card is a friendly volatility product for both experienced and new traders.
BitMax.io is the industry leading next-generation digital asset trading platform that provides a broad range of financial products and services to both retail and institutional clients across the globe. It was founded in 2018 by a group of Wall Street quant trading veterans and built upon the core values of blockchain, transparency, and reliability, to deliver high-quality client services and efficient trading experience.
BitMax.io always strives to provide its global users with a comprehensive set of trading products. Besides the newly launched Volatility Card, its margin trading function is also a step forward from product offering perspective to better serve their dynamic trading needs. For those users who understand and acknowledge the risks involved in margin trading, the function allows users to borrow funds from the platform and to trade more digital assets than they normally could afford. (The margin trading function of BitMax.io is not available for North American markets.)
Also, it helps to attract more trading volume and boost liquidity on the platform. This type of leveraged trading can be applied for high-risk, high-return trading strategies. However, it is important to note that it also can be a risky approach for users, especially those who have little experience in risk management.
Building on the commitment to industry top-tier product offering and high-quality customer service as a part of its client-centric strategy, BitMax.io has expanded its global client base to over 170,000 registered users with 53,000 active community members. The launch of Volatility Card not only broadens its product scope on the platform but also supports overall product innovation and market structural optimization in digital asset trading.