Bitfinex Now Has a Derivatives Contract Offering Exposure to Bitcoin Dominance

Bitfinex says the perpetual swap provides investors with a less volatile form of exposure compared to a plain-vanilla bitcoin futures contract.

AccessTimeIconMay 8, 2020 at 1:00 p.m. UTC
Updated Sep 14, 2021 at 8:38 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A new derivative from Bitfinex allows investors to take a position on bitcoin's overall share of the cryptocurrency market.

The Seychelles-based crypto exchange said Wednesday the BTCDOM contract would allow investors to bet on bitcoin's dominance rate – a metric for determining the market's bitcoin value versus the value of other cryptocurrencies.

The first of its kind, BTCDOM is a perpetual swap – a future without expiry date – that relies on a proprietary Bitcoin Dominance Index, comprised of seven of bitcoin's most liquid trading pairs, including those with large-cap coins, such as ether, EOS, litecoin and XRP.

Bitfinex says the contract provides investors with a less-volatile form of exposure compared to a plain-vanilla bitcoin contract because it references bitcoin to a broader basket of digital assets. That means that while the value of the contract obviously changes on the bitcoin price, it takes into consideration the broader performance of the whole asset-class, which remains highly correlated.

The BTCDOM contract, which is settled in USDT, began trading Wednesday.

Aggregated open-interest – a metric for trading activity – for bitcoin futures soared to an all-time high of over $5 billion before the pandemic triggered a mass-liquidation. As the graph below shows, open-interest has already regained much ground since "Black Thursday."

2020-05-07-10-58-25

That might be because many market participants are already trying to hedge against the possible outcomes of the upcoming halving event. Provider GSR told CoinDesk in March, just before the lockdown began, that it had seen record demand for customized options contracts from miners who wanted to lock-in a price ahead of the halving.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.