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FxWirePro: Is contemporary hedging actually different from Crypto-hedging as BTC investments in topsy-turvy mode?
We mentioned in one our recent post that the leading global hedge fund data whizz, Barclay Hedge launched its latest equal-weighted index, the Cryptocurrency Traders Index, evidencing that participants in the industry plunged almost over 29% in March 2018. It is down by 43% year to date, posted three consecutive monthly losses.
BTC price start has been terrible to begin 2018, this’s now raising a great caution of appeal for cryptocurrency hedge funds that make money regardless of the market being bullish and bearish.
The blockchain organization Coingeek owned by the billionaire Calvin Ayre has been funding a lot of research and development in regard to the Bitcoin blockchain (BCH). Just recently it launched a GBP 5mln Bitcoin cash tokenization contest.
Bitcoin, the vanguard for the whole crypto market, has recoiled from the recent highs, directing the crypto fund returns down 48 pct in Q1, as per the Eurekahedge Crypto-Currency Hedge Fund Index.
The wide range of funds is unlikely to sustain in long-run, and a few have crumpled before now. Contrary to this, new funds have developed and released despite the fact of the prevailing setbacks.
Amid all these mixed bags of news, the hedging position than straight up selling your coins. Sure enough, these positions have their own negatives cost- or otherwise. Trading fees, spreads, counterparty risk, cash losses, and particular tax issues could make them less alluring, while given the less developed state of the segment, availability is also an issue.
In cryptocurrency gamut, leverage is only slackly associated with the concept of hedging, and a lot of traders and investors are playing the markets with way larger positions than their invested capital.
Amid the stringent regulatory framework actions were taken by SEC, CME and CBOE have come up with BTFs (bitcoin futures) that could be instrumental in risk mitigation while price discoveries. However, the regulated derivatives industry for crypto as an underlying asset is yet to emerge.
Having mentioned that, if not regulated instruments, the leveraged hedging products are already available and handy, that is one of the best ways to protect the profits without selling your precious coins are offered, and even giving you the flexibility to take additional positions in other coins that you think have a better risk profile.
Basically, at a negligible fee, one could get rid of the risk of holding coins (for a while) without actually losing them.
Whereas the wide range of assets are aligned in modern-day finance and you have various methods to choose from for hedging purposes, such as options, futures, futures options, forex options, ETFs, swaps in the case of liquid traditional assets (bonds, stocks, currencies, commodities etc).
While several of those now have the equivalent in the crypto-space, at this juncture, the pragmatic approach of the usage of the crypto versions is quite far from the traditional ones, and their application requires much more effort and sometimes a leap of faith.
The FxWirePro’s currency strength index signals BTC has highly bullish environment amid all the above mentioned underlying news as it flashes 155 while articulating at 12:29 GMT, for more details on the index, please refer below weblink:
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