How are you all? Today I will discuss with you about Cryptocurrency volatility markets .I will try to present my experience.  I am young and have very little experience so please excuse any mistakes.
By calculating a volatility index from cryptocurrency option prices, we analyze this market's expectation of future volatility. Volatility, as a measure of an asset's variability over time, is the most common risk measure in financial theory. We set out to explore volatility and tail-risk in the crypto space with benchmarks tailored to this young asset class.

[Source](https://pixabay.com/photos/cryptocurrency-security-c-clamp-3412306/)


Naturally, as the cryptocurrency spot market develops, derivatives markets follow suit. Following the introduction of futures contracts, i.e., mutual obligations to exchange some underlying amount (e.g., Bitcoin) at a specified price in the future, investors nowadays have access to option contracts, a type of derivative that gives the buyer the right to receive the asset at a specified price (strike) at some future time. (call option) or delivered (put option). Options—like other financial derivatives—are tied to their underlying by an arbitrage relationship, which is based on the option's cash-flow counterpart. The dynamic nature of an option contract is directly linked to the inherent volatility over the life of the contract. The option market can therefore also be seen as a volatility market. This paper considers two types of volatility: first, historical volatility which is calculated from the previous price of the underlying; Second, implied volatility which is estimated from the current market price of options. The latter reflects market expectations of future volatility, in the sense that it is calculated from today's price to hedge the risk of future volatility.A very important benchmark and investment tool is the financial index, which allows investors to get information about the current state of the market. Furthermore, indices that become tradable assets and thereby derivatives improve market accessibility. For example, these price or return indices are complimented by a measure of risk, most famously the volatility index, colloquially known as the 'fear index', which is designed to capture expected volatility.

[Source](https://pixabay.com/photos/bitcoin-cryptocurrency-finance-6555612/)


Unlike traditional indices, extracting reliable volatility information from options is highly -Requires a wide spectrum of quality data, which has only recently become available for cryptocurrencies. That is, since cryptocurrency options were introduced in 2016, market liquidity and participation have improved significantly. According to data from Skew2, the total number of outstanding contracts (open interest) has tripled from its 2019 value, bringing the market size above USD 1 billion for the first time in mid-2020. This increase in size is a great opportunity to tap into a very interesting source of volatility data.Today's discussion ends here.  I hope you find it interesting and able to understand.  Share your thoughts on today's topic.  Wishes and blessings to all.  Everyone stay well stay healthy stay with Steemit