The First Dual Currency Linked Crypto Product Launched by Matrixport
Having said that, I feel that our DCP is going to be massively popular for BTC Hodlers for the following reasons:
1. You are simply putting your BTC holdings to work (than simply getting 0% in your ledger or taking insane amount of risk on lending platforms that promises you double digit returns).
2. A traditional wealth management product that is not usually offered for individuals in the crypto world.
3. A short tenor product that gives you the flexibility to invest your BTC from as little as approximately two days left to expiry.
4. Highly customizable with transparent risk and return information for our users. Through different tenors and linked prices, we have made it clear for users what the potential return profile is like.
5. No hidden fees and charges.
6. Our institutional-grade custody solution ensures the safety of funds as soon as you transfer BTC to our platform.
7. You will be generating a positive yield in either USD or BTC terms in each scenario (check out my yield diagram below). The risk involved, however is that you may be giving up potential upside should BTC price accelerate dramatically. As such, the selection of your linked price will rely on your perception of future BTC’s price volatility.
Anyone could have beat us to launching such a product for users. The difference is that we listened to our customers, analysed current market offerings, then developed an institutional-grade product. Through decades of financial, tech and blockchain experience, we are able to bring all this know-how to build an innovative, seamless and user-friendly product. At Matrixport, our mission is to make crypto easy for everyone. We are focused on delivering a full service digital financial services platform for our users so you can gain access to the most innovative products.
As compared to traditional DCPs, crypto DCPs will generate significantly higher yield because implied volatility of digital assets continues to remain elevated. In general, the greater the volatility, the higher the yield. The Bitcoin’s financial market structure is fairly nascent and it is fast developing with derivatives such as futures, perpetuals and options. As a result, implied volatility continues to hover at elevated levels that range between 50% to 150% this year.
On the other hand, FX vol has been a snoozer for the longest time, trading at sub 10%. This is why even as non-crypto investor, it is so tempting to engage in this strategy in a world plagued with QE4eva and negative interest rates in Japan and Europe. I also hold the view that volatility of crypto assets will mirror that of FX vol, and will eventually trade towards their levels in the years to come. In the meantime, at current levels, there’s still plenty of juice for yield hungry investors in the crypto world.
Focus on your risk appetite and your view on future BTC volatility to invest in our DCP
At the end of the day, invest with a tenor and linked price that you feel most comfortable (don’t make your decision solely on the potential return), especially for those who are buying BTC to invest in our DCP as your principal is not guaranteed. As a rule of thumb, higher linked price products are generally more conservative with lower returns. On the contrary, lower linked products are more risky and compensated with higher return. In general, the risk associated with our product decreases as time to maturity, the tenor, declines. This is because the shorter the tenor, the lesser the chance that something will go wrong.
In the next few weeks, we will continue to add more product features and launch innovative crypto-finance products for you. So stay tune!
Disclaimer
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.
Published at Tue, 29 Oct 2019 05:07:58 +0000
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