COTI’s method addresses the challenging liquidity environment of this evolving asset class and allows the extraction of the needed data to evaluate implied volatilities.
This indicator is designed to show the level of implied volatility in the crypto market through a decentralized crypto option price index. We can say that it is similar to the VIX volatility index, which is often referred to as the fear index on the S&P500.
On the other hand, this index was introduced in October 2020, and its main function was to support transactions and deposits in Ether and Tether.
Likewise, so-called volatility tokens have also been introduced as part of CVI 2.0 for investors to use as a hedging tool.
What Is the Range of Values, and What Does It Represent?
The range of values for the COTI CVI index is in the 0-200 range. The historical calculation of smoothed CVI for the period between 30.03.2019 to 26.11.2020 gives us the mean value of 82 (one index point is equivalent to one volatility percent point), the minimum value 49.3, and the maximum value 172.4.
COTI CVI index is based on the Black-Scholes option-pricing model, allowing the seller to build a hedging portfolio.
What Are the New Functions?
Meanwhile, some of the newly available features are:
- First, it includes a USDC platform (USDC/USD)
- Second, the so-called volatility tokens in DEX
- Third, you have an improved user experience
- Fourth, there are margin operations on the Polygon network (MATIC/USD)
As a result, the new version of CVI introduces a USDC platform, which allows opening positions, betting CVI USDC via CVI, and providing liquidity.
For starters, the platform will allow margin trading.
Also, volatility tokens are an important milestone for DeFi in general and CVI in part. That is why they allow users to trade and work with them to protect themselves from temporary losses.
What Is Our Opinion on This Index?
The cryptocurrency market is very volatile and often does not respond to technical analysis criteria in a very precise way. This is why the CVI Index is a very valuable tool for traders of this type of financial asset.
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One of the advantages of these changes is that traders can now access more money to support their trading strategies by leveraging their USDC positions on the Polygon network for X2. Also, X3 margin trading will be possible in the future.
In conclusion, this is a good indicator for cryptocurrency traders. Remember to always check where your money is. See our list of the best cryptocurrency companies.
It is also very very important that you keep yourself well informed about Crypto news, read our daily reports.
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