Hong Kong's 'reverse Bitcoin futures' may trigger volatility, warns Bitfinex head of derivatives

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The CSOP Bitcoin Futures Daily (-1x) Inverse Product was listed on the Hong Kong Stock Exchange today, allowing investors to bet on Bitcoin (BTC) price declines. Jag Kooner, Head of Derivatives at Bitfinex, believes this product could spark potential volatility in the crypto market and show investors’ sentiment, as it begins trading alongside elections and Ethereum ETF narratives.

“The launch of Asia’s first Bitcoin futures inverse product in Hong Kong could mark a significant development in the Asia’s financial and cryptocurrency markets, especially after China’s blanket ban in almost all Crypto activities,” shared Kooner with Crypto Briefing. CSOP is an asset manager that covers the China mainland, Hong Kong, and US markets.

Notably, this product could offer investors a unique opportunity to profit from volatility in the price of Bitcoin, something that reflects “a growing sophistication and diversity in the types of investment vehicles available in the digital asset space.”

Moreover, as it acts as a tool for diversification and risk management, the inverse BTC futures could help sophisticated traders hedge their positions in times of high volatility. “By enabling profit from price declines, it can help manage risk, especially during volatile market periods.”

As a result, this might attract a broader range of investors, even those that are bearish on Bitcoin’s short-term prospects. This translates to more volume and liquidity in the Bitcoin futures market.

Kooner also highlights the regulatory milestone this product represents, as it shows Hong Kong’s ambition to become a leading hub for crypto and blockchain innovation.

“Hong Kong has long been a hub for financial innovation and is also known to have a soft hand approach to financial institutions, and this move further cements its position as a leading player in the cryptocurrency market. […] It demonstrates a deeper understanding of investor needs and a commitment to providing a broad spectrum of financial instruments that can cater to different market conditions.”

As investors look to diversify their investments and position themselves for the months ahead, the Head of Derivatives at Bitfinex assesses that market participants should watch for potential volatility. “The inverse product could influence short-term price movements and provide insights into investor sentiment,” Kooner concludes.

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