Digital asset exchange Bitfinex is launching an equity index derivative for for two of the largest stock markets in Europe.
The platform will offer exposure to the Europe 50 (EUROPE50IXF0:USTF0) and Germany 30 (GERMANY30IXF0:USTF0) in the form of perpetual contracts that will be settled in USD Tether (USDT).
The contracts, which offers users up to 100x leverage, went live on Monday morning at 9:00am UTC.
“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. “Notably, settlement is in tether (USDt). This will facilitate the seamless settlement of cross-asset class trading strategies, hedging and the management of risk.”
Bitfinex has also employed a strategy to keep the price stable over the weekend by putting in price limits, with the Europe 50 and Germany 30 having a +/-5% cap on the final mark price from 4:30 PM UTC until 8:00AM UTC on the next business day.
Exciting news about the Derivatives Platform ⬇️https://t.co/R4cHDY44Kv
— Bitfinex (@bitfinex) September 28, 2020
While the Bitfinex Derivatives platform is only available in eligible jurisdictions, the implementation of traditional markets on a digital asset platform paves the way to sophisticated trading strategies that can be employed by capitalising on divergence between both markets.
Bitcoin has often been described as a hedge to the traditional financial system, leading to a series of compelling comparisons with gold.
Having both Bitcoin and stock market indexes side-by-side gives traders the unique opportunity to hedge Bitcoin holdings by going long on the stock market and visa versa.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.