Cole Kennelly of Volmex Labs, founder and chief executive officer, joins theCUBE Research hosts John Furrier of theCUBE Research and Dave Vellante of theCUBE Research for the FinTech Exchange Series at NYSE Wired to discuss Bitcoin volatility indices and the evolving data infrastructure for crypto markets. Kennelly outlines Volmex Labs' role in building the Bitcoin volatility index family and a broader index platform. They describe more than 300 indices, tradable contracts and API distribution to Bloomberg, TradingView and multiple exchanges and explain how implied volatility benchmarks support risk management, derivatives and product innovation. They also address integration with artificial intelligence, AI, for index analytics and distribution.
Key takeaways include that the BVIV index offers a standardized measure of crypto implied volatility and enables tradable products and hedging, Kennelly states. They observe that institutional participation tempers extreme price swings while crypto remains materially more volatile than equities. John Furrier of theCUBE Research and Dave Vellante of theCUBE Research emphasize the growing need for real-time market data API delivery and AI integration to productize indices and power next-generation markets.
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Cole Kennelly, Volmex Labs
Cole Kennelly of Volmex Labs, founder and chief executive officer, joins theCUBE Research hosts John Furrier of theCUBE Research and Dave Vellante of theCUBE Research for the FinTech Exchange Series at NYSE Wired to discuss Bitcoin volatility indices and the evolving data infrastructure for crypto markets. Kennelly outlines Volmex Labs' role in building the Bitcoin volatility index family and a broader index platform. They describe more than 300 indices, tradable contracts and API distribution to Bloomberg, TradingView and multiple exchanges and explain how implied volatility benchmarks support risk management, derivatives and product innovation. They also address integration with artificial intelligence, AI, for index analytics and distribution.
Key takeaways include that the BVIV index offers a standardized measure of crypto implied volatility and enables tradable products and hedging, Kennelly states. They observe that institutional participation tempers extreme price swings while crypto remains materially more volatile than equities. John Furrier of theCUBE Research and Dave Vellante of theCUBE Research emphasize the growing need for real-time market data API delivery and AI integration to productize indices and power next-generation markets.
In this interview from theCUBE + NYSE Wired: FinTech Exchange Series, Cole Kennelly, founder and chief executive officer of Volmex Labs, joins theCUBE's John Furrier to discuss how the crypto market is building its own version of the VIX. Kennelly explains how Volmex's Bitcoin Volatility Index (BVIV) and family of over 300 indices give traders a robust way to measure implied volatility, hedge risk and speculate on crypto without managing complex options positions directly. He traces the company's five-year journey from a personal trading itch to a licensed da...Read more
exploreKeep Exploring
What does Volmex do, and what products, indices, tradable contracts, and partnerships does it offer?add
What are the uses and benefits of a volatility index/product like BVIV, and how does it compare to the VIX and to trading options directly?add
How does Bitcoin's volatility index (BVIV) behave during periods of extreme market fear, and how does its level and correlation with the Bitcoin spot price compare to the VIX?add
How do you commercialize and distribute your indices, and what types of products and platforms use them?add
How are your volatility indexes being adopted and commercialized—who is using them and what is the business model for getting exchanges and product creators to participate?add
>> finance area, but as blockchain and AI come together, new financial stacks are being built. The world is moving to a new world, and that's going to be innovation speed, AI-generated content, things that will change the game, but the world is completely different. We have Cole Kennelly here. He's the founder and CEO of Volmex Labs. Great to see you. Thanks for coming on.
John Furrier
>> Thanks, John.
John Furrier
>> Explain what you guys do, because you're in the data business, okay? FinTech has evolved over time as definitions, but it's still the same thing, finance and tech coming together. What do you guys do?
Cole Kennelly
>> So at Volmex, we build the leading Bitcoin volatility index. We have over 300 different indices that are live today. We're most well known for our Bitcoin and our crypto volatility index family. Really, we're an index, emerging index conglomerate that has a number of families of indices, and we make them available for informational display purposes to various partners, Bloomberg Terminal, TradingView, Refinitiv, or LSEG Data & Analytics now. We have nine tradable contracts on four exchanges, including Polymarket, Bitfinex, and a couple of others. And so really we're this robust Bitcoin, crypto, volatility index standard and expanding into other areas, including rates and factors and more.
John Furrier
>> Talk to us about the journey. When did this start? When did you get going? What was the idea? What was the problem? What was the opportunity?
Cole Kennelly
>> So the company's about five years old. I have been following the options market my whole life, I've also been working in crypto for about eight years full time. I had worked at another crypto startup that got acquired. My dad works at a U.S. equity options exchange for a couple different exchanges for about four years.
John Furrier
>> It's in the family blood.
Cole Kennelly
>> Yeah. So, I had kind of been dabbling in the crypto options space early on. Then I started trading more and more. I realized there was no crypto VIX. I realized that, hey, there really needs to be this tool for risk management, speculative behaviors, also informational, providing valuable, robust information to investors and traders. So I started building this out, and we've assembled a great team, and we've built a great product that many thousands of people use.
John Furrier
>> What was the core value from an index team? What were people needing? Understanding the volatility piece of it, the predictability. What was the main value that you saw that people needed?
Cole Kennelly
>> I think similar to the VIX, the VIX and BVIV are both a robust measure of implied volatility that traders and investors and market participants can follow and understand, hey, the market is feeling very uncertain at the moment. It's feeling very, you know, the market's expecting a lot of risk. So I think the sort of informational use case is a very big one. but then also a pure volatility instrument where traders and investors can express a view purely on implied volatility, just like the VIX with the futures complex and ETF complex, without a sophisticated options capability, right? So in the options market, you can compose a series, a strip of options to get this pure volatility exposure, but you need to constantly manage that. And so a volatility product really abstracts away all the complexity and makes it so traders and investors can very easily hedge, diversify, speculate on this asset class.
John Furrier
>> I'm smiling because crypto is a very unique culture. Volatility, there's huge swings in crypto. And the participants are holders. They hold long positions. But you got big whales, right? But you also have a developing market. When did the velocity of trading start kicking in when you saw a lot more, I won't say retail -like activity, but obviously with Solana, you saw a lot of dApps coming out and gaming and other verticals. You saw retail come in, dabbling. Anyone who's been alive for the past five to ten years that's under the age of 40 probably has crypto in their portfolio because the price has accelerated a lot since then. remember when I first started SiliconANGLE, it was like 32 cents a Bitcoin. And they were giving it away to get people to use it. But it's now mature. Talk about the volatility. Is it still the same pattern? What's your take on that? Has it kind of settled in? What's the data tell you?
Cole Kennelly
>> So in times of extreme fear in the crypto market, you'll always see that very negatively correlated vol and spot relationship, right? And so early in February, Bitcoin went from 85K to 70K in a matter of, I don't know, 12 hours or something like this. And our index went from 45 to above 80 and peaked and mean reverted back to below 80. And so essentially in those very volatile days in the Bitcoin market and crypto market, it's always going to be very negatively correlated. In general, the VIX is 14 or so right now. BVIV is about 40. And so you can think that Bitcoin is two and a half, three times more volatile than the U.S. equity market. That makes sense, actually. When I started Volmex, BVIV was at even higher levels. It was 100 plus at certain times. So the volatility as big players like BlackRock, Fidelity, MicroStrategy, some of the big institutions that have entered the space and started running various options, volatility strategies, I think that's dampened, suppressed the vol with time. But, yeah, it's become a little bit less volatile with time, but it's always going to be very negatively correlated. And we'll see those 70, 80 vol point, you know, highs on very volatile days. So it's an interesting question.
John Furrier
>> Cole, you have a unique position. And I want to get this out there because I think it's important we understand the impact of the culture shift from the folks who were inside the ropes for over a decade or more to now it's gone mainstream. Talk about that mainstream adoption and impact just categorically. Give people a sense of the reality of the scope of adoption in mainstream.
Cole Kennelly
>> I think crypto broadly has become a very mainstream phenomenon. You have the likes of stable coins, USDT, USDC, which hundreds of millions of people use globally for better money, more stable and more transferable money in different countries which don't have access to SWIFT and the U.S. banking system. And so I think that crypto with stable coins, with Bitcoin has permeated the mainstream culture. In terms of what we're doing at Volmex, there's many traders that follow the BVIV Index on TradingView, we've been on Bloomberg Television, it's been featured organically, we've been featured in CNBC international segments.
John Furrier
>> That's outstanding.You guys have built a really good standard.
Cole Kennelly
>> Reuters, CoinDesk writes about Volmex often. Yes, exactly.
John Furrier
>> Well, we'll start quoting it immediately.
John Furrier
>> We'd love it.
John Furrier
>> Let's do it. people want to have confidence. There's no doubt that anyone who knows anything about crypto and fintech knows that this asset is going to grow.
Cole Kennelly
>> Exactly.
John Furrier
>> I think I am bullish on Bitcoin, Ethereum. They all have use cases. I'm more enthusiastic about the programmability and integration of the wallet and the economies that have come out of these deployments. I think that's going to have a huge impact. What's your vision on that? Because Bitcoin is Bitcoin. There's some things that are going on with Bitcoin, but Ethereum, Solana, people are building on top of. That's going to create a ton of activity. How does that change your thinking?
Cole Kennelly
>> So Bitcoin has two use cases or two functions, send and receive. it's really just a ledger for sending and receiving value. Solana and Ethereum, on the other hand, and things like Hyperliquid, there's a lot more expressivity you can achieve with these networks. smart contracts are kind of the innovation that Ethereum created. And, essentially Solana has taken that forward with more throughput, lower latency. Essentially, these networks allow for developers to create applications that are really just anything can be created with you can create a program on these networks and then have all different sorts of functions, collateralize, redeem, mint and burn and issue token or redeem token, trade a future, trade a swap, trade an option, settle that option. All of these functions can be codified into the blockchain and run on, Solana, Ethereum and things like Hyperliquid. I think what Hyperliquid is doing is really interesting. They've created this 24 -7 futures market for commodities and single stock equities. And I think that Bitcoin started moving decentralization and crypto forward. but Solana, Ethereum, Hyperliquid, Lido, these type of applications are kind of carrying the torch and Bitcoin is really a pristine money, a pristine collateral.
John Furrier
>> It's beautiful, yeah.
Cole Kennelly
>> It will continue to be around, but it's interesting.
John Furrier
>> Bitcoin is a no -brainer in my mind. But you bring up a good point. You're talking about, the physical and digital world are converging. I ride the subway here in New York and I pull out my iPhone, click on my Apple Pay, boom, click. That's a wallet. Eventually custody is going to be nailed down 100%. That gets done. The programmability, you mentioned the applications on top of these networks are going to provide massive innovation products on top, specifically finance. This is a huge opportunity. I'm sure you must be thinking about this on the product roadmap. How are you thinking about this from a business standpoint? You obviously got the standardization, you got the great index, you're measuring some volatility, Great starting point. But it's just getting started, actually. What are your views on as this develops for your business?
Cole Kennelly
>> It's a great question. The way we think about Volmex is really that we are kind of this index conglomerate. We've started and been very successful, I think, with implied volatility for Bitcoin and crypto. But with the advent of things like AI, prediction markets, other sectors emerging, there's going to be the need for robust benchmark indices. And so we're building some new things that are relevant to those things. And we're excited about where the market's going. And we think that anything—
John Furrier
>> You feel good about it.
Cole Kennelly
>> Very good, yeah. Anything that's unspoken for in the incumbent index markets, the MSCI’s, the S&P’s, and not created by sort of an emergent upstart index company, we feel that we understand how to make a robust index methodology and commercialize it. We know how to get it on Bloomberg and TradingView and the media.
John Furrier
>> Yeah, and so it's – First of all, I love going down the rabbit hole, so to speak, pun intended. But, reality is that if you look at the financial market, again, I'm an East Coast guy originally, but living in California for 25 years in Palo Alto, I come in with fresh eyes. It's very transactional. Real time is everything. And now you have the immutability. You have now the programmability. As these things rise up, you're going to see a massive focus on the tech around data. So there's a data opportunity, and there's obviously challenges with data gravity and real -time latency and timing. You mentioned prediction markets. if you've got trades and things going on all around the world, physics is still physics. You're going to need to have the right clock. You're going to need to have all these tech features. So we've still got more tech to build. That's coming. So there's going to be a lot of real-time. So as real-time becomes important, it makes the data sourcing. You're in the data business, basically.
John Furrier
>> Yep.
John Furrier
>> Feed business. I guess I would say you're kind of in the platform business. You're doing data platformization. Explain that to people, what that means.
Cole Kennelly
>> Really, we build these methodologies for BVIV, for BVIV-US, for EVIV, and our 300 other indices. And we publish it every second, every 100 milliseconds. So you create an implementation and we publish it. And the way we commercialize it is we have a set of APIs, which exchanges, product creators, data platform firms can pipe into and then consume that index for either a display purpose or a tradable product.
John Furrier
>> Yeah, and they use it as an input. You're an ingredient to their product.
Cole Kennelly
>> We're a benchmark for,
John Furrier
>> exactly,
Cole Kennelly
>> we're a benchmark for derivative products, potentially other things, regulated products, offshore products, really every type of form factor of derivatives, futures, perpetuals, prediction markets, ETFs, regulated swaps, everything really that trades requires a benchmark. And so really, we license our index, our indices to these different entities, which then ingest the data and then have a tradable product experience or maybe just display it.
John Furrier
>> Yeah. You got to my next question before I could ask, because I asked about the business model. So you're API -based, usage -based, right? Anything else going on in your business, how you guys are organized and make money? Or is it straight up connections, API, build the best IP methodologies, make it as fast as possible, accurate?
Cole Kennelly
>> Really, there's a standard that's emerged. you have Bloomberg Terminal, Refinitiv, Polymarket, Bitfinex, Bybit that have all started adopting our indexes. And basically, other companies want to be part of that, right? So they want to have a vol product and they want to tap into the broader liquidity and the ecosystem of futures and perpetuals and other things that are coming around BVIV and BVIV-US. And so essentially we get inbound, we do some outbound to different exchanges, different product creators, ETF companies, regulated exchanges, and work to basically get them participating in the standard. And really, the big business model is licensing the product, licensing the index for tradable products. And so futures, as mentioned, all these different form factors. But then also display is another interesting one. There's a zillion use cases.
John Furrier
>> The beauty is in the eye of the beholder. But if you're NYSE or their parent company, Intercontinental Exchange, they're in the data business. Are they a customer? Are they using you guys?
John Furrier
>> Hopefully soon. We'll get on that.
John Furrier
>> I don't work for NYSE or ICE, but I think, looking at what their business is doing and looking at, say, the Bloomberg Terminal, there's a huge appetite for one, display for media, product integration. So I'd imagine if I was a data company, I'd want to integrate you immediately because then the entrepreneurial or product management type behavior kicks in. Talk about that piece because I think, you know, immediate low hanging fruit to me is great. If we have a CUBE terminal someday, not that it would be a Bloomberg Terminal like, but we'd probably do it on a site. I'd imagine AI could manufacture a great feed, say content, bring in multiple things. I do my job and I'd love to pump in stuff to add value to people. So I probably, and look at Perplexity Comet, right? They're doing some pretty cool things. You mentioned Solana, they're super fast. So I'd imagine that the creativity of the product side to your customer base is probably kind of at an all -time high right now, formulating. Where to start? Art, what's your take on that? What's your observation around the opportunity to productize off of that enablement?
Cole Kennelly
>> Yeah, AI is a huge innovation. And I think it's the UI in a sense, right? Where you go to the AI and you ask it a question with the MCP servers and the like. And so essentially our data can be ingested by AI models. We're working towards that where you can query the MCP server or the AI frontier model and say, what is the BVIV level over the last two months on average on a Friday or something like that. And so I think an AI wrapper around index data is very interesting and it makes way for a lot of different tradable products.
John Furrier
>> It's 24 -7 too. The thing that I love about the market you're in is that there's no bell. It's always on, right? So, you know.
Cole Kennelly
>> And it's pushing the broader market forward like that, right? I think all the options exchanges, the equities exchanges.
John Furrier
>> You should talk to the ICE people, the Intercontinental Exchange, because they're progressive. They invested in Coinbase initially. They were one of the early investors in Coinbase. Since day one, they were into Bitcoin. They've got companies going public here. And that's what I love about the market on crypto, just to go on an aside, is that you go back during the nuclear winter, dark times, now pre -regime that's in there now. It was tough. People took a lot of shrapnel now the companies that have survived and thrived through that Their market cap could go public here compared to some of the best IPOs because they were disciplined They're making good money and it's just incredible. look at Solana. They're incredible
Cole Kennelly
>> Yeah, I you know Coinbase is worth 45 billion or so last I checked Robinhood's a 90 billion dollar company Robinhood's bigger than CME, it just shows the innovation of the broker versus an exchange but it just shows the innovation.
John Furrier
>> Robinhood Ventures Fund I is in the building today. They got, I think, an ETF up there now.
Cole Kennelly
>> Oh, yeah, they have a new venture fund that's trading, right?
John Furrier
>> Yeah, that's pretty cool. So, again, this speaks to the cultural shift. We are in a cultural shift. Explain that because a lot of people over the age of 40 or 50 look at crypto, and they think, oh, NFTs, ICOs, scams, but not really. Really? Anyone under the age in that other generation, the younger generation, they're like, this is the future because they're all digital. Explain that. Put context around that, because I think that's super important. People don't understand the relevance of this.
Cole Kennelly
>> Everything is digital now. Banks used to do over-the-counter transaction tickets and everything became digitized. I think crypto is a step further in that journey where everything is global now. The really interesting thing about tokens specifically or on-chain applications, decentralized applications, things like Hyperliquid or applications on Solana or Ethereum is that anybody, anywhere in the world, whether you're in Singapore, Abu Dhabi, Brazil, France, New York, LA, Miami, you're buying the same exact currency, the same exact form factor. The same exact product. There's no concept of, hey, this instrument trades on NYSE and there's an ADR on another exchange. You're buying two different things and there's a delta between the price. Crypto really is an equalizer of the playing field where anybody anywhere in the world is buying the same exact thing. And so I think that's really powerful. And that goes with tokenized equities. Anybody anywhere in the world can buy, you know, a share or a derivative of Apple or Tesla or SpaceX. And previously that wasn't really the case.
John Furrier
>> Well, even private companies. I love that vision too. we had an event here on the NewFi, we called it. Why not put my stock on-chain? If I'm a Databricks stockholder, they're on Series M or K. I forget what letter they're on. But they may never go public. But you have companies going public with two years of operations. They hit escape velocity. because so you're seeing the capital markets are shifting, but the game is still the same value creation, value extraction, liquidity, just new format.
Cole Kennelly
>> There's a couple of good examples of this pre IPO and as you mentioned Hyperliquid, which is the biggest perpetual futures exchange that's sort of in the decentralized form factor has launched a couple of pre IPO stocks and they launch it a couple of months before it goes live. and then there's some price discovery. You know, the market is not as big as Nasdaq or NYSE or incumbent exchanges, but there's price discovery and it shows how the market is feeling about this security, this name. And so I think crypto, there's some crypto native innovations that are moving the market forward.
John Furrier
>> Yeah, a whole new ballgame. Cole, really appreciate what you do and congratulations on the hard work and getting that data out there. I can see how that value gets created. for your customers. And I think there's a lot more headroom out there. So thanks for coming on our FinTech Exchange program. Appreciate it.
Cole Kennelly
>> Thanks for having me.
John Furrier
>> Cheers. All right, this is the FinTech Exchange. Again, talking to the leaders and the innovators, building, operating, and investing in the new ways to do things. Again, the game is still the same, but it's changing how it gets done. And sometimes it's faster, quicker. Sometimes it's a little bit more technical. It's all the same. If it happens, we'll be there. We're doing our part here on theCUBE. I'm John Furrier, your host. Thanks for watching. Thank you.
John Furrier