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The Rise of Trading Products: Granting Sophisticated Access to Crypto

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In 2017, many traders and investors flocked to cryptocurrencies because they were attracted by the kind of returns not available in the less-volatile traditional markets. However, volatility inevitably comes with risks as well as opportunities. 

But crypto offers many opportunities that go far beyond traditional instruments. Programmable tokens and smart contracts create the potential to automate trading and investment vehicles, making them easier to understand and more accessible to retail users of all risk appetites.

The race to innovate in centralized finance

Derivatives trading platform FTX was the first centralized exchange to pioneer the use of leveraged tokens, enabling users to gain margin exposure without the hassle of managing margin, liquidation or collateral. Leveraged tokens are derived from the exchange’s perpetual swap contracts and operate as tradeable ERC-20 tokens that can be withdrawn and traded.

They rebalance every day and can also be redeemed based on the user’s trading activity. These are higher-risk instruments suitable for traders looking for more exposure to volatility.

If imitation is the sincerest form of flattery, then FTX can take comfort from the fact that Binance was relatively late jumping on the leveraged token bandwagon. After initially listing FTX’s leveraged tokens, Binance suddenly u-turned and removed them, citing user confusion as the reason. Only weeks later, the exchange giant announced it was launching its own version of leveraged tokens.

However, FTX has been determined to continue providing innovative trading solutions to crypto users. One such example is its MOVE contracts, which are basically an options straddle strategy with centralized liquidity for speculating on Bitcoin’s (BTC) volatility. 

Rather than managing two options contracts with the same strike price and expiration, known as a straddle, MOVE contracts allow users to access a more sophisticated type of investment with a more user-friendly and understandable format. 

Synthetic assets and other derivatives flourish in DeFi

Due to its immaturity and experimental nature, decentralized finance applications have experienced several notable setbacks in 2020, including the bZx and Balancer exploits. Nevertheless, the value locked in DeFi has soared and is set to touch the $7-billion mark soon.

Much of this popularity can be attributed to the fast pace of innovation, as the fertile ecosystem layers on more sophisticated products beyond lending pools, insurance instruments and stablecoin-issuing decentralized autonomous organizations.

Aave is one example of an application that has moved up the rankings to rival the popularity of MakerDAO. The main reason is the opportunity for flash loans that involve borrowing and repaying a loan in a single blockchain transaction. Their demand has been fueling the practice of yield farming — running funds through a series of DeFi applications in an attempt to extract maximum returns.

Some of the current limitations of derivatives products on DeFi platforms are worth noting, however. Ethereum congestion and gas fees could pose a threat to the continuing expansion of DeFi DApps, while the network continues to grapple with the complexities of the Ethereum 2.0 upgrade. Furthermore, Vitalik Buterin himself has warned traders about the risks of yield farming.

Nevertheless, for professional traders, the volatility of crypto paired with an increasingly impressive suite of trading products is enticing, to say the least. As more analysis firms and traders conduct their due diligence of the booming derivatives market, expect the deluge of products to continue parallel to growing interest. 

Simplifying investments for the risk-averse 

For the more risk-averse average Joe investor, passive investment is usually the optimal risk-adjusted method for investing in the crypto space long-term. Using strategies like dollar-cost averaging into Bitcoin and Ether (ETH), users can gain exposure to an asymmetric call option on the future of money. 

However, piling into a single crypto asset risks maximizing the drawdowns during price crashes, such as March’s “Black Thursday.” Attempts to offset this risk have led centralized finance and DeFi innovators to develop more passive investment vehicles.

Unfortunately, there is no crypto exchange-traded fund yet, but the vanilla option for a broader market exposure of large-cap altcoins is index funds. Similar to major stock index funds, crypto index funds encompass a basket of crypto assets aggregated into a single investment vehicle. They are independently weighted based on investor preferences and the fund’s design and can range from baskets of the leading 10 assets to the top 200 by market capitalization. 

Some centralized finance index funds have been stealthily gaining traction in a way that’s somehow escaped the attention of the crypto media. Adrian Pollard, a co-founder of bitHolla — a producer of white-label crypto exchange software — pointed out:

“Many have been so focused and concerned about Bitcoin’s price volatility not noticing a secret stash quietly piling up at Grayscale, which now manages the largest crypto investment vehicle around.”

Related: Interest in Grayscale Crypto Products Not Easing Up, Not Just BTC Now

Funds that include more assets, particularly lower cap altcoins, grant investors more potential upside should anything resembling the mania of 2017 repeat. However, they also mean more exposure to drawdowns, as lower cap altcoins still tend to fare poorly during sharp downswings in larger-cap crypto assets.

Tokens as a fund 

The caveat with Grayscale is that it’s only available to accredited investors, which is somewhat antithetical to the notion of crypto becoming a more inclusive financial system. That’s where “tokens as a fund” of different shapes and sizes enter the picture. 

A tokenized fund is essentially an ERC-20 token on the Ethereum network that mirrors the price of an index fund using oracle price feeds and other technical components.

Coinbase’s Index Fund, which covers Coinbase’s listed basket of assets, is an optimal method for retail investors to gain index exposure, and since Coinbase is also the largest fiat-to-crypto gateway in the United States, its index would be easy to access for many.

The retail-friendly funds remove the accredited investor hurdle, making them more appealing to retail investors who want broader exposure and less volatility. To manage volatility spikes, index funds are ideal passive options for investors who are hesitant to dive all in on BTC, ETH or a handful of large-cap altcoins. 

Now that the stock market is beginning to resemble crypto with its absurd bankruptcy stock runs, crypto doesn’t seem so much like the Wild West of finance anymore. Retail traders now have broader exposure to more risk-averse instruments available, and the progressively bigger pro-trading crowd can enter a market thriving with long-overdue derivatives innovation.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew Rossow is a millennial attorney, law professor, entrepreneur, writer and speaker on privacy, cybersecurity, AI, AR/VR, blockchain and digital currencies. He has written for many outlets and contributed to cybersecurity and technology publications. Utilizing his millennial background to its fullest potential, Rossow provides a well-rounded perspective on social media crime, technology and privacy implications.

Source: https://cointelegraph.com/news/the-rise-of-trading-products-granting-sophisticated-access-to-crypto

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OKEx Launches Highly-Lucrative Crypto Rewards Program

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[PRESS RELEASE – Please See Disclaimer]

OKEx is widely-known as one of the world’s largest cryptocurrency exchanges for spot and derivatives trading. As part of its philosophy of giving back to the community, the exchange has recently announced the commencement of a highly-lucrative discount and rewards program, featuring a multi-million prize pool over time.

Following this announcement, the Maltese platform is releasing a series of campaigns, such as the Happy Friday giveaway which entails a massive profit distribution, as highlighted below. Here’s a brief overview of the main campaigns:

To kick things off, OKEx has decided to reward loyal users who fit specific criteria by granting them access to 20% of the platform’s futures and perpetual swap transaction fees from the past seven weeks. These funds will be placed into a pool, and they’ll be distributed as a one-time payment. Furthermore, OKB holders will receive double the payout relative to the USDT value of the OKB they hold.

The prize will reward customers who have deposited, held, or traded funds between the 16th of October 2020, and the 26th of November 2020.

This massive bitcoin giveaway will commence on the 4th of December 2020 and will continue on a weekly basis for an undetermined time frame. As part of the Happy Friday campaign, loyal users will be given access to 20% of the platform’s income from perpetual swaps and futures trading.

Unlike the one-time payment campaign, both new and loyal users will be eligible for the Happy Friday giveaways. OKEx traders will be rewarded proportionally to the ratio of their trading volumes and effective assets. As expected, OKB token holders will reap even greater benefits! As such, OKEx will provide token holders with double the OKB relative to its value in USDT.

High volume traders who held an asset value above 10,000 USDT, before 4:00 PM UTC on the 23rd of November, will receive a commission rebate card. Customers will be eligible to receive a prize varying between 100 USDT and 1,000 USDT, according to the net value of their assets.

okex_pr

OKEx is a firm believer in the future of cryptocurrencies. Since digital assets will play a central part in the future’s financial system, another giveaway is warranted to further aid adoption.

With this in mind, newly-registered customers who are buying over $100 worth of cryptocurrencies, will obtain $80 in bonuses. As education is quintessential to attaining a positive trading experience, new users will also receive educational support from Telegram-based community groups and the OKEx Academy.

To learn more about this lucrative campaign centered on new users, readers can check out the terms and conditions.

OKEx represents a top-ranking exchange for trading on cryptocurrency spot prices and derivatives. Customers can access a complex marketplace featuring diverse and highly-advanced trading tools. Every day, digital asset traders, miners, and institutional investors hedge risks and transact millions of dollars. OKEx is well-known for its multiple investment instruments like futures, options, and perpetual swaps for most major crypto assets. As part of the OKEx ecosystem, investors are provided a high degree of flexibility, meant to help enhance profits while efficiently managing risks.

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Source: https://cryptopotato.com/okex-launches-highly-lucrative-crypto-rewards-program/

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The Changes Continue: Facebook’s Libra Has Been Rebranded To Diem

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  • Facebook shook the world last year after announcing plans to introduce a “single global digital currency” dubbed Libra. However, the social media giant’s efforts were quickly scalded by global regulators as the project received massive blowback.
  • Facebook didn’t give up on its idea. Instead, the company decided to rebrand its two main products. Firstly, the Calibra wallet became Novi, and today, Reuters reported that the Libra name had been changed to Diem (meaning ‘day’ in Latin.) 
  • Stuart Levey, CEO of the Geneva-based Diem Association behind the digital coin, confirmed that the name change comes as a direct consequence of the regulatory hurdles. He noted that “the original name was tied to an early iteration of the project that received a difficult reception from regulators. We have dramatically changed that proposition.”
  • The Diem currency would operate as a signal dollar-backed digital coin. Although Levey failed to specify the timing of the launch, recent reports suggested that it may arrive as early as January 2021. 
  • Levey further explained that the Novi team has already begun building a digital wallet that will eventually hold Diem coins. Apart from waiting for approval from Swiss regulators to launch, the Diem Network is also in talks with US federal and state watchdogs. However, Levey didn’t disclose the nature of those negotiations. 
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Source: https://cryptopotato.com/the-changes-continue-facebooks-libra-has-been-rebranded-to-diem/

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Coinbase Faciliated MicroStrategy’s $425M Bitcoin Purchase Without Moving The Market

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The leading US-based cryptocurrency exchange Coinbase assisted in MicroStrategy’s massive purchase of $425 million worth of BTC. The platform pledged to help other large firms diversify their portfolios with bitcoin in the future as well.

Coinbase Involved In MicroStrategy’s BTC Purchase

The NASDAQ-listed business intelligence firm made the news on two occasions earlier this year as it announced the total purchase of 38,250 bitcoins. At the time, this sizeable amount equaled about $425 million.

However, the entity that helped broker the deal remained unknown until today. The San Francisco-based crypto exchange Coinbase announced that it was “selected as the primary execution partner for MicroStrategy’s $425 million purchase of Bitcoin.”

The community speculated on how such a considerable amount didn’t move the markets as the price of BTC remained relatively still back then. Coinbase explained that this was the company’s intention in the first place:

“Using our advanced execution capabilities, leading crypto prime brokerage platform, and OTC desk, we were able to buy a significant amount of bitcoin on behalf of MicroStrategy and did so without moving the market.”

Furthermore, the exchange noted that its system takes a single large order and breaks it into many small pieces that are executed across multiple trading venues. This type of smart order routing reduces the trade’s impact on the market and assists in disguising the overall trade size.

This also helped MicroStrategy to get a better price for its BTC purchase as Coinbase’s trading team “achieved an average execution price that was less than the price at which the buying started.” The post highlighted that this strategy ultimately saved 1% (or about $4.25 million) for the NASDAQ-listed company.

More Large Companies To Come?

MicroStrategy’s purchase kicked off a wave of large companies and prominent individual investors who expressed willingness to get in bitcoin as well.

Jack Dorsey’s Square followed with a $50 million BTC allocation. More recently, the Wall Street giant Guggenheim Partners filed a document with the SEC to purchase about $500 million worth of bitcoin for one of its funds.

Coinbase asserted that more firms will look to BTC to hedge or diversify their excess cash. Consequently, the large US exchange will “look forward to helping more corporate companies and institutions looking to diversify their capital allocation strategies with crypto.”

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Source: https://cryptopotato.com/coinbase-faciliated-microstrategys-425m-bitcoin-purchase-without-moving-the-market/

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