Matrixport Dual Currency Cryptocurrency Investment Product Based on Betting on Bitcoin Rate
The profitability of Bitcoin investments in 2020 against the backdrop of the financial crisis has already exceeded similar world indicators and the most commodities. But in a young cryptocurrency market, investors lack variety when they look for more complex investment products.
Matrixport, a financial cryptocurrency platform launched by Bitmain, the Chinese mining equipment manufacturer, decided to take up the vacant niche of cryptocurrency investment products. It offers traders an extensive list of investment products that are tied to the Bitcoin exchange rate and allow a more customized approach to investment portfolio management, as its investment products are designed for customers with different perspectives on the cryptocurrency market and has a different level of risk tolerance. The latter indicator is considered to be the key in creating the optimal investment portfolio in recent decades.
Let us analyze in more detail one of the new investment contracts traded on Matrixport, a dual-currency investment product (Dual Currency BTC / USDC product). This is a short-term investment product with floating returns and varying levels of risk tolerance. The profitability of the contract is guaranteed at the time of purchase, and the currency in which the product is calculated varies depending on whether the price of executed contract is more or less than the price of the contract at the time of purchase.
This contract is very close to options that have already become traditional in the financial market. The client determines for himself how he predicts a change in the Bitcoin rate, and makes a “bet” by buying a contract. The contract expiration dates are calculated mainly in days, given how situation develops in the cryptocurrency market, 11 days for example. Before purchasing a contract, the client calculates the rate of return per year and after the expiration of the contract. The contract is not subject to early repayment or premature settlement.
Contracts are settled both in Bitcoins and in USDC stablecoins linked to the US dollar. This stablecoin is the second most popular after USDT. This is a collective development from the American crypto exchange Coinbase and the crypto financing company Circle (their joint division is called CENTER), stablecoin has full financial support, confirmed by deposit accounts in American banks.
We will analyze some typical scenarios when buying a dual-currency investment contract from Matrixport. Suppose an investor buys a contract, 1 Bitcoin with a current price of $ 9,212 with execution in 9 days. According to the investor, the Bitcoin exchange rate will increase to $ 9,750 by then. Based on the contract price, strike price and contract duration, Matrixport calculates a rate of return of 1.19% over 9 days and 48.26% at an annual rate.
Example 1. The Bitcoin exchange rate has grown more than the investor predicted - up to $ 11,000. In this case, on the day the contract expires, the investor will receive the amount of stablecoin investments at the rate that he predicted ($ 9,750), as well as profit for 9 days - 1,19% of these $ 9,750. Total of 9,866 USDC in stablecoins will be transferred to investors account with initial investments of $ 9,212. The total return will be 7.01% for 9 days.
Example 2. The Bitcoin exchange rate did not increase, but, on the contrary, fell to $ 8,000. In this case, on the day the contract expires the investor will receive 1 Bitcoin and 1.19% income also in BTC. Total - 1.019 BTC. In terms of Bitcoin, the profit will be 1.19%.
Thus, the dual-currency investment product from Matrixport allows you to smooth out the risks associated with investments in cryptocurrency. Yes, in Example 1, an investor would receive a higher return if he simply bought a coin and held it for 11 days. But if hislevel of risk tolerance is not so high, then this investment product is able to smooth out the blow from the Bitcoin exchange rate fluctuations that the investor could not predict.
The advantages of the Matrixport dual-currency investment contract provides another way to manage capital when investing in cryptocurrencies. The idea of a contract for the financial market is not new, but there are almost no such tools on the cryptocurrency market. Most financial platforms, if they offer any additional instruments, in addition to buying and selling, are limited to lending or investing in cryptocurrency hedge funds.
The Matrixport dual currency investment contract has a short validity period (tenor), which allows you to use this tool with a forecast horizon of a couple of days. This is also beneficial in a volatile market like cryptocurrencies. All information on profitability and contract expiration dates is absolutely transparent. In any case, the investor will receive the promised return, the question is - in what currency the contract will be settled. Thus, the user has all the cards on hand in order to calculate his income and evaluate how much risk they are ready to tolerate.
The dual-currency investment product Matrixport does not imply a complete loss of investments, such as margin trading. In terms of Bitcoin, the investor will maintain its position in any scenario.
Of the minuses, the investor risks losing profit when the Bitcoin exchange rate jumps sharply (see Example 1). Therefore, it would be better to use this investment product at the same time with other methods of obtaining profitability in the cryptocurrency market - direct investments in cryptocurrencies and other investment products. This will diversify the return on the investment portfolio by hedging risks from high volatility.
You can ask your question and learn more about the new Matrixport products in the Russian chat by clicking on the link.