How Does the “Reference Rate” Concept Address Exchange Volatility in Index Calculation?
A reference rate, such as the CME CF Bitcoin Reference Rate (BRR), is a standardized price for a cryptocurrency calculated over a specific time window, typically a one-hour period. By calculating the rate as an average of prices from multiple exchanges during this window, it smooths out the minute-to-minute volatility and temporary price spikes that occur on individual exchanges, providing a stable, reliable benchmark for settlement.
Glossar
Cryptocurrency Reference Rates
Valuation ⎊ Cryptocurrency reference rates represent standardized, aggregated price discovery mechanisms crucial for accurate derivative pricing and risk management within digital asset markets.
Cme Cf Bitcoin Reference Rate
Benchmark ⎊ The CME CF Bitcoin Reference Rate (BCRR) serves as a widely adopted benchmark price for Bitcoin, calculated by the Chicago Mercantile Exchange (CME) and CF Benchmarking.
Reference Rate
Benchmark ⎊ Within cryptocurrency derivatives and options trading, a reference rate serves as a benchmark, providing a foundational value against which contract pricing and settlement are determined.
Temporary Price Spikes
Volatility ⎊ Temporary price spikes within cryptocurrency markets, options trading, and financial derivatives represent abrupt, short-duration deviations from established price trends, often exceeding historical volatility ranges.