Engage in Prudent Risk Management Through Innovative Crypto-Financial Products
In mid-March, Bitcoin took a sharp plunge of around 50% to trade below $4,000 for the first time this year. Investing in crypto is certainly not for the faint hearted. While most will advocate in “long-term investing and hodling”, it is imperative to engage in risk management so you can sleep like a baby at night.
As the digital assets sector continues to evolve, we are starting to see the growth in crypto-financial derivatives such as futures, options and swaps. With the influx of derivative instruments, BTC hodlers and investors can now start hedging and protecting against unforeseen volatility or losses. This is especially more important now because the world is likely to head into a recession with broad sell-offs across different asset classes.
Whether you hodl a few Bitcoins or manage a large treasury balance that you raised in the last few years, these products will be helpful for anyone who invests.
- 100% Principal Protected Upside Bitcoin Product
This product is great for BTC hodlers who want to ensure that they are hedged against any potential downside price movements. Not only is your BTC principal protected, it allows one to participate in rising Bitcoin prices through unlimited upside exposure. We launched this product last month and have since executed for a few of our clients; those who have bought must have let out a sigh of relief after the Bitcoin’s recent violent sell-off.
Take the example above, when our client invests 100 BTC when it’s currently trading at $9,500 with a Linked price of $10,000 for 3 months. If Bitcoin prices settles below $9,500 on expiry, he will get back 100 BTC. We also have a USD-denominated product; when you invest $100,000 in principal, your entire capital is 100% guaranteed.
Advantages
- 100% principal-protected with downside protection. We can also tailor-make to offer more attractive returns if the product offers less protection (i.e. 95 to 99.5% principal protection).
- Unlimited upside return (USD-denominated) and rises with BTC’s price
3. Highly customizable with flexibility in Linked Price and Expiry Date
Process
1. Reach out to one of our client service staff on Telegram. The required minimum initial investment amount will be 10 BTC.
2. Get you onboarded via KYC
3. Start building your 100% principal protected BTC bull product
2. Buy Put Option through the Bear Punter product
I understand most BTC investors are hodlers, but that doesn’t mean you don’t need to engage in any risk management. In fact, most Bitcoin investors should consider some form of downside protection because in times like these when every financial asset is being sold down, you do not want to liquidate your BTC portfolio at a substantial loss because you needed to top up margin for your stock brokerage account. It is because of the extreme volatile nature of Bitcoin that requires some form of hedging. Buying a put can help hedge any downside risk because a put gives the buyer the right to sell a specified amount of BTC at a specific price at maturity.
For example, Bitcoin is trading at $6,000 today and you bought your coins when they were at around $4,500 in 2018. You are afraid that BTC may fall below $4,500 before halving, so you buy a put option with a Linked Price of $4,500 for 0.0265 BTC. If BTC settles below $4,500 by 3 April, you will be hedged against a price fall at $4,500 by earning a profit that is derived by subtracting the settled price from the Linked Price of $4,500. If BTC settles above $4,500, you simply lose the premium that you paid for (i.e. 0.0265 BTC). In other words, you can also speculate for a price decline without risking your entire capital (i.e. through liquidation of your futures position); because you only lose what you pay for (i.e. the options premium).
Advantages
1. Hedges against any future price decline in BTC.
2. Acts as a speculative bearish strategy that allows one to hugely profit if his directional bet is correct.
3. Stand to lose only your options premium, which is usually a small fraction of your notional investment.
Process
1. Sign up for the Matrixport Mobile App (you can find it on the app store “Matrixport Invest”)
2. Deposit BTC into your wallet on the App
3. Start picking your Linked Price and Tenor to buy your Bear Punter!
3. Buy Call Option through the Bull Punter product
Most of us who invest in Bitcoin are generally motivated that it is likely going to be one of the best performing asset class of our lifetime. While the inherent elevated volatility makes it uncomfortable for most to invest as much as we would like to, a conservative way of gaining exposure to Bitcoin will be to buy a call option via Matrixport’s Bull Punter product. A BTC call gives buyer the right to buy a specified amount of BTC at a specific price at maturity.
For example, you think there’s a chance that BTC will rise by more than 30% by 3 April, you can buy the Bull Punter with a Linked Price of $8,000 for 0.03 BTC. If Bitcoin settles above $8,000 on expiry, you stand to generate a return. If it doesn’t close above the Linked Price, you simply lose your premium. This is an optimal way for those who may not want to lose a substantial portion of their underlying investment in Bitcoin.
Advantages
1. Acts as a speculative bullish strategy that allows one to hugely profit if his directional bet is correct.
2. Stand to lose only your options premium, which is usually a small fraction of your notional investment.
3. Allows one to buy at a Linked Price in the future without having the entire exposure of owning BTC (reduces large potential loss).
Process
- Similar to the above process of using the Bear Punter product.
4. Earn High Yield in USD stable coins to buy BTC with the Dual Currency (DCP) USD product
With the recent QE programs announced by central banks around the world, it has been a better time to earn high interest rates while accumulating Bitcoin. Matrixport’s DCP USD can help fulfill this objective by killing two birds with a stone; helping you to earn a high interest yield while waiting to buy BTC at your preferred price. Besides, most of us investing in crypto would have converted some of our crypto holdings into USD stable coins or fiat during the recent volatility.
For example, you may want to buy BTC at the price of $5,000 by 24 April but want to also earn high USD stablecoin interest yield while waiting for Bitcoin to reach that price. With the DCP USD stable coin product, you can earn 144.07% annualized interest in 10 days!
Advantages
1. Earn high interest yield on USD stable coin
2. Buy Bitcoin at a desired level lower than prevailing market
3. Customizable; you can pick your desired linked price and tenor to decide which product suits your preference.
Process
1. Similar to the above process of using the Bear Punter product.
There is no rocket science in risk management. With the upcoming Bitcoin’s halving in an uncertain economic climate however, expect greater volatility. This is where we come in: at Matrixport, we believe in democratizing and empowering every crypto investor with sufficient and easy-to-use tools to manage the asset class’s volatility. With us, you don’t need to have a finance degree to protect your crypto portfolio — we can tailor conventional wealth management products to suit your needs.
Additional Information:
Products FAQ: https://invest.matrixport.dev/faq/en
Sign up Link: https://invest.matrixport.dev/register/en?invite_code=R349WZ
If you need to reach out to one of our salesperson or get connected to the latest market news, please join http://t.me/matrixport on telegram
We also have twitter account @realMatrixport
Bio of Author: Eugene is a sales and business development director for Matrixport, a spin off from Bitmain, the world’s largest cryptocurrency mining business. Matrixport is a global full service digital financial services firm that provides leading financial solutions, latest industry insights and strong connectivity to the ecosystem to help institutions invest, navigate and safeguard their digital assets with the most secure and compliant offering.
He has 10 years of experience in institutional trading, financial derivatives and sales in Citibank, Barclays Capital and Deutsche bank. Eugene started investing in cryptocurrencies in 2017, and has since advised multiple projects worldwide, raising more than U.S. $50 million. Because of his active involvement in fundraising, Eugene is well-connected with the crypto ecosystem.
Risk disclosures:
1. The dual currency product is an investment product involving derivatives. Before making any investment decision, you should take your own independent review on whether the product is suitable for you in light of your own financial situation, investment experience, investment objectives, investment horizon, willingness and ability to bear risks, and whether you understand the nature and risks of the product. If in doubt, you should seek advice from independent financial advisers.
2. The dual currency product is not equivalent to a deposit. This product is not principal protected. You should not treat the dual currency product as a substitute for ordinary savings or deposits.
3. The price of digital currency fluctuates significantly. The total payout you receive for the dual currency product may be significantly less than the return or interest you may otherwise have received from other investment. In cases when there is a market failure of digital currency, the value of the settlement amount (in settlement currency) you receive on expiry date may be significantly less than the value of your investment amount.
4. Please note the liquidity risk of the dual currency product. Once you invest in a specific dual currency product provided by us, no early withdrawal or early termination by you is permitted.
5. This statement is for reference only. It is not and does not by itself constitute any offer, solicitation or recommendation to buy, sell or provide any investment product or service. Any information contained herein is subject to change at any time, without prior notice.
6. This statement has not been reviewed by any regulatory authority in Cayman Islands.
7. This product is not available for clients in the Mainland China.
