3 Things that Bitcoin Holders Can Do to Manage Risk and Increase Returns
The 3rd Bitcoin Halving is taking place on the 11th of May. Around the same time, Coindesk will be hosting one of the largest blockchain conferences. Matrixport is excited to participate in the event and join the panel “Happy Halving Day: Making Sense of Bitcoin’s Quadrennial Landmark”. Cynthia WU, Head of Business Development and Sales at Matrixport, will represent the company. She will share her perspectives on how the Bitcoin halving impacts miners and how Matrixport can help the miners pre/post-halving.
Matrixport is a spin-off from Bitmain, founded in early 2019, and offers one-stop crypto financial services to institutional and retail investors. Not only has the company expanded very fast, from a team of 70 to 150 across 7 locations globally, but has done a great job in spearheading a series of industry-leading product innovations for Bitcoin miners and investors. Some of Matrixport’s innovative products, such as the Dual Currency Investment and Zero Cost Loan, are first-of-its-kind in the crypto world and have gained good traffic among miners and traders. Volatility is a feature of the cryptocurrency market but it means different things to different people. The following will show you how a miner or investor can take advantage of Bitcoin volatility via Matrixport’s products and make good returns on investments.
Why Zero Cost Loan?
Matrixport launched Zero Cost Loan in response to the Bitcoin halving and miners’ needs to borrow working capital to invest in mining operations (e.g. upgrade mining rigs), as well as their wish to pay zero or nearly zero interest. It soon became very popular among miners. The idea of Zero Cost Loan is that by giving up part of the potential BTC price upside, beyond the take-profit level, miners will get to enjoy the benefits of zero interest on the loan. The product has downside protection so that users bear no risk of liquidation or margin calls.
There are different scenarios that explain why this product suits certain types of miners or investors. For example, a miner is in urgent need of working capital to buy a batch of S19 Antminers; he can apply for a Zero Cost Loan by pledging his BTC. If the current Bitcoin (BTC) price is USD9,000, the take-profit level is USD16,000 and the loan tenor is 4 months. At the end of the tenor, if the price of the BTC is below USD16,000 he will need to repay the loan without paying any interest. However, if the BTC is USD18,000 he will have to give up the upside of USD2,000 (USD18,000-USD16,000) and he will take profit at the level of USD16,000. There is no margin call even if the market faces a huge drawdown as seen on the 12th of March. Miners can enjoy peace of mind and there is no need for action during extreme market volatility.
It works best for miners who have a clear picture of their future operations and risk appetite. Not only does it help miners to borrow at no cost, but it can be used as a means to help miners manage their cash flow when they choose a suitable take-profit level. If a miner has a target to sell 25% of his Bitcoin at a price level above today’s spot price, he can set that level as the profit-taking price and then enjoy the rest of the benefits. Other than miners, some traders are making use of this loan to borrow money and add leverage.
Why is the Dual Currency Product innovative?
The Dual Currency Product is a first-of-its-kind asset management product launched by Matrixport last year and has gone viral among retail investors. During the past 6 months, it has been traded by users from 20 different countries and has helped its users to make 5M USD profit in total. An investor can invest in BTC and receive settlement in BTC if the settlement price is below the Linked Price, or receive USDC if the settlement price is above the Linked Price, which ensures at least one of the cryptocurrencies is making profit. The pay-off calculation methodologies are fully transparent and the investors can earn three-digit annualized returns regardless of BTC price fluctuations. With the success of BTC and USDC Dual Currency Investment products, Matrixport is ready to launch the ETH version of the product on the 18th of May 2020. ETH holders can enjoy mid to high yield on their ETH investments soon.
Example：
Underlying: BTC/ETH
Linked Price: 11,000/200
Expiry Date: 20-May-2020
Yield: 5%
Annualized Yield: 107%
Investment Currency: BTC/ETH
On 4-May-2020, Alice bought 1 BTC/ETH notional of the above product.
On 20-May-2020,
If BTC/USD (or ETH/USD) price is below USD11,000 (or USD200）, Alice gets 5% return on BTC/ETH, which is 1.05 BTC/ETH
If BTC/USD (or ETH/USD) price is at or above USD11,000 (or USD200), Alice gets 1*11,000*(1+5%) =11,550USDC (for BTC investment) or 1*200*(1+5%) USDC=210USDC (for ETH investment).
How Fixed Income can help?
On the 18th of May, Matrixport will launch a Fixed Income Investment product on the Matrixport App. The product will give the USD stablecoin holders a 7–8% fixed annualized return. In addition to Fixed terms, Flexi-terms are available and give additional flexibility and liquidity to investors. It provides a powerful alternative to a fiat saving account in a low to negative interest environment. Matrixport believes that the launch of the Fixed Income Investment product will reach an audience that is wider than existing crypto holders. Average investors who are looking for a fiat-based yield now have this option.
Fixed Income investment is a reliable digital assets-based wealth management product through creditor’s right assignment. This product has real crypto assets guaranteed by excess pledge and ensures asset security by institutional-grade custody and a rigorous risk control mechanism.
Interested in trying these products out?
If you’re interested in trying out the Matrxiport App, here are some first steps you can take:
- Visit our website to register an account
- Download App https://testflight.apple.com/join/RYNYoUUx
- Check out our previous Medium articles to learn more about how our products work.
- Join our Telegram to ask questions and learn more.
- Follow us on Twitter to get the latest updates about Matrixport.
About Matrixport
Founded in February 2019, Matrixport is the gateway to the digital economy where you can trade, custody, invest and borrow crypto assets all in one app. With rich industry resources and leading technology capabilities, Matrixport aims to create the next generation digital financial service platform. Our vision is to enable a more open and equal financial system using blockchain technologies.
Matrixport has launched trading, digital asset custody, and cryptocurrency lending services for clients around the world, with even more innovative product offerings to come. Matrixport is headquartered in Singapore with offices worldwide.
