At bcause we understand the need for fair and transparent practices, which allow investors to make choices based on their preferences and risk tolerance alone. To that end we have created the bcause index to fairly price Bitcoin and offer volatility and implied volatility values that enable investors to assess their level of risk and formulate an investment strategy based on their unique goals.
*bcause LLC is in the process of developing the index and plans to begin publication in the near future.
An essential element in the development of futures contracts is the definition of the expiration price. While the majority of futures products are expired based on market transactions and bids and offers, non-equity index based products’ final expiration prices are dependent upon the compilation of the index.
The crypto-currency market place has been in existence since 2009. It has been the past couple of years that this new market has gained limited, but global attention and participation. Within the past six months or so indices have emerged that provide daily prices from a single or multiple crypto-currency spot markets. No index seems to have established itself as a market standard. It is difficult to acquire information on the compilation of an index and the key processes associated with an index.
bcause LLC plans to launch as its initial product a futures index based on the most heavily used and traded crypto-currency, Bitcoin. As stated, the expiration price calculation is vital to the success of a futures product. In the case of an index futures product, the market place must have confidence that an index is broad-based; price sources are dependable; and the calculation methodology is appropriate. Additionally, if a DCM creates and manages an index that will be used to price its index futures product, the DCM must be transparent with its processes and procedures associated with the data collection; index calculation; and publication of its index. The bcause LLC Bitcoin Index (“Index”) is compiled using transparent and verifiable processes, providing market participants with confidence in their objectives and making it suitable for use in financial instruments. bcause has no financial interest in the spot market prices or the crypto-currency spot markets that are used in compiling the Index.
The Index is based on price data submitted by qualifying crypto-currency spot market exchanges. The daily Index is calculated using trade prices and bid/offer prices from a defined period(s). The Index will be calculated and published for all U.S. business days. The Index price calculated on the day that is the final trading day of a bcause Bitcoin futures index contract will serve as the final settlement (expiration) price for the expiring futures index contract.