CME Group has launched a new set of cryptocurrency benchmarks aimed at providing institutional traders with standardized pricing and volatility insights. This suite includes a Bitcoin volatility index, a critical tool for assessing market risk.

Announced Tuesday, the CME CF Cryptocurrency Benchmarks encompass various digital currencies such as Bitcoin (BTC), Ether (ETH), Solana (SOL), and XRP. One notable addition is the CME CF Bitcoin Volatility Benchmarks, which gauge the anticipated volatility in Bitcoin and Micro Bitcoin Futures options. This index functions similarly to the VIX, reflecting how much price fluctuation traders expect in the coming month.

Source: CME Group

Volatility benchmarks are fundamental in traditional finance, aiding traders to quantify risk and support the pricing of options. The CME CF Bitcoin Volatility Index is primarily a standard reference for risk management rather than a tradable contract.

As institutional demand grows, driven by the rise of Exchange-Traded Funds (ETFs) and an increase in derivative trading, the CME reported a surge in futures and options activity, with volumes reaching over $900 billion in the last quarter. This indicates a robust interest that may signal a deepening liquidity in the market, particularly with Ethereum-based derivatives also witnessing significant trading activity.