Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Bitcoin Forum => Topic started by: CastyLamer on February 07, 2020, 01:37:06 PM
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Welcome to the second chapter of BitOffer Institution! In this chapter, we are going to instruct that “What is Bitcoin ETF”. Since Bitcoin was born, the trade forms of Bitcoin became diversified from the initial spot trading to Bitcoin options, Bitcoin futures, and other derivatives. As the cryptocurrency market developed fast in recent years, Bitcoin ETF started showing up in front of the investors. In the process of investing, we keep learning so that we can make ourselves a better investor.
What is Bitcoin ETF?
ETF (Exchange-Traded Fund) is a type of security that involves a collection of securities-such as stocks-that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. ETF is in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like an ordinary stock. And it is highly accepted as a financial derivative in traditional finance. In the Bitcoin market, which is growing, the room for Bitcoin development in the future is immeSPAM BANble.
Bitcoin ETF is an investment that special asset management can track the Bitcoin price index. Its biggest benefit to investors is that it can enable investors to hold cryptocurrency more easily from buying one or even more tokens. In short, purchasing Bitcoin ETF means that you invest in Bitcoin indirectly. Besides, the investors who buy Bitcoin ETF never worry about the store and security of the digital asset due to the reason that they don’t have to hold Bitcoins.
How do we invest in Bitcoin ETF?
So far, an ETF that links to a basket of cryptocurrencies has not been launched yet. But we can see a Bitcoin Leveraged ETF launched by the professional Bitcoin derivatives trading platform. Its most important feature is its 3X leverage. Its purchase and redemption support investors to use USDT.
BitOffer Bitcoin Leveraged ETF requests 0 margins and no liquidation. Moreover, it charges a low trading fee and 0 fund management fee. Besides, with its automatic positions adjusting mechanism, its payoff can reach 3X to 15X because its net value will be updated in real-time, so it is calculated by compounding. To the investors who prefer Bitcoin investment, Bitcoin ETF is better because it can help investors gain 3 times or even more payoff than investing in Bitcoins on the spot trading market.
BitOffer has launched 3 indexes of BTC3X, BTCR, BTC3R as the net value and the prices of the corresponding ETF. The price and the net value may have some deviations, but it will be incredibly small in the purchase and redemption on BitOffer.
First, investors need to choose the direction: Buy BTC3X if Long, Buy BTCR or BTC3R if Short.
BTC3X means Open Long 3X BTC: When the bitcoin price rises 5%, the BTC3X is expected to rise by about 15%.
BTCR means Open Short 1X BTC: When the bitcoin price drops 5%, the BTCR is expected to rise by about 5%.
BTC3R means Open Short 3X BTC: When the bitcoin price drops 5%, the BTC3R is expected to rise by 15%.
How to trade BTC Leveraged ETF?
To an investor, the trading patterns of BTC Leveraged ETF and the bitcoin spot trading are much the same. But BTC Leveraged ETF supports users to buy long or short, which means that users can buy BTC3X when expecting the price to rise and buy BTCR or BTC3R when expecting the price to drop. In the aspect of risk, investors are allowed to exchange ETF and USDT anytime, and moreover, BTC Leveraged ETF will never face any liquidation.
First, choose the direction(Long or Short). Choose BTC3X when the bull market expected, choose BTCR or BTC3R when the bear market expected.
Case 1：
The bitcoin price is $9,000, you predict the bitcoin price will rise, and now the fund net value of BTC3X is 1. Thus, you purchase 1,000 units of BTC3X with 1,000 USDT. On the second day, the bitcoin price rises to $9,900(10%), the fund net value of BTC3X will be 1.3 due to its 3X leverage, which means your profit will be 30% by earning 300 USDT.
Case 2：
The bitcoin price is $9,000, you predict the bitcoin price will drop, and now the fund net value of BTCR is 1. Thus, you purchase 1,000 units of BTCR with 1,000 USDT. On the second day, the bitcoin price drops to $8,100(-10%), the fund net value of BTCR will be 1.1, which means your profit will be 10% by earning 100 USDT.
Case 3：
The bitcoin price is $9,000, you predict the bitcoin price will drop, and now the fund net value of BTC3R is 1. Thus, you purchase 1,000 units of BTC3R with 1,000 USDT. On the second day, the bitcoin price drops to $8,100(-10%), the fund net value of BTC3R will be 1.3 due to its 3X leverage, which means your profit will be 30% by earning 300 USDT.
Even though BTC Leveraged ETF and futures trading have some similarities such as their leverage rates has the possibility to enlarge the investors' profits, obvious differences still exist. The most significant one is that BTC Leveraged ETF does not request any margin which leads to “No Liquidation”. To the investors who have less time to focus on the market, BTC Leveraged ETF will save your time to the greatest extent.