Despite the notion that portfolio hedging is a preserve for institutional investors, Robby Greenfield, the CEO of Umoja Labs, says even retail investors can use well-known techniques to insulate their crypto portfolios against sudden and steep price swings. The CEO however concedes that many retail investors have not engaged in hedging because such tools have […]
Bitcoin News
Umoja Launches Beta Hedging Service to Bolster Crypto Investment Safety
On Tuesday, the crypto platform Umoja unveiled its beta version of hedging-as-a-service, designed to shield users from crypto losses. Umoja’s mission is to enhance the safety and accessibility of crypto investments, opening up hedging opportunities in a market valued at 0 trillion. Umoja Debuts Beta Hedging Platform The crypto platform Umoja has announced the beta […]
Bitcoin News
Countdown To Bitcoin ETF 2024 Decision: Traders Employ Hedging Tactics, Bloomberg Unveils
As the long-awaited deadline for a positive or negative decision on spot Bitcoin ETF applications approaches, Bloomberg reports that the BTC options market is seeing increased hedging activity as traders prepare for a crucial decision on January 10th.
The report indicates a surge in open interest for put options expiring on Jan. 12, suggesting that market participants are taking steps to mitigate potential losses in the event of a negative verdict by the US Securities and Exchange Commission (SEC) regarding these index funds holding the cryptocurrency.
Market Readies For Bitcoin ETF Verdict
The Bloomberg report highlights that the open interest for put options, which allow holders to sell Bitcoin, has seen a significant increase for contracts expiring on January 12.
This surge in open interest has resulted in a higher put-to-call ratio for these specific options compared to contracts with expiration dates further out from the January 10 deadline.
As seen in the chart below, the most prominent strike prices for the put contracts are ,000, ,000, and ,000, respectively, indicating that put holders could exercise their options to minimize losses in case of a negative market reaction to the SEC decision.
The put-to-call ratio, considered a measure of overall market sentiment, stands at 0.67 for the January 12 options contracts, indicating a more cautious approach among traders.
Ryan Kim, head of derivatives at FalconX, suggests that leveraged/speculative traders are employing Bitcoin put options to protect their leveraged longs, anticipating significant price movements in either direction.
The higher put-call ratio for January 12 options further reflects the market’s desire for protection against a potential negative decision.
The surge in open interest for put options expiring on January 12 indicates a growing need for protection in case of an unfavorable ruling. While Bitcoin’s rally has softened the impact of its 2022 decline, market expectations for ETF approval may already be priced in, posing potential risks for the market.
BTC’s Price Resistance And Potential Dip
Bitcoin has experienced a remarkable rally this year, with expectations for ETF approval driving its price up by more than 60% since mid-October.
However, the Bloomberg report suggests that the surge in demand for the anticipated ETFs may already be factored into the token’s price, potentially exposing the market to a “sell the news” scenario in the second week of January.
Furthermore, QCP Capital, a Singapore-based crypto asset trading firm, predicts topside resistance for Bitcoin in the range of ,000 to ,500 and a possible retracement to ,000 levels before the uptrend resumes.
Bitcoin is currently trading at ,400, experiencing a 1% decline over the past 24 hours. Over the past 14 days, the cryptocurrency has shown a sideways price movement with a slight decrease of 0.4%.
Given Bitcoin’s well-known volatility, it remains uncertain how the market will react as the looming decision and potential catalysts draw near, and how these factors will impact its price dynamics.
However, the upcoming decision is not the sole catalyst that can potentially drive Bitcoin’s price in 2024. The cryptocurrency is also anticipated to experience a significant catalyst in April 2024, known as the halving event.
This event has historically resulted in an upward surge in Bitcoin’s price, and it is predicted to propel the cryptocurrency beyond its previous all-time high (ATH) of ,000 throughout the upcoming year.
Featured image from Shutterstock, chart from TradingView.com
‘Hedging Bitcoin and Ether’ — FTX Seeks Court Approval for Strategic Partnership With Galaxy Digital
FTX Trading Ltd., accompanied by its linked debtors, has approached the U.S. Bankruptcy Court in Delaware with a proposal to collaborate with Michael Novogratz’s Galaxy Digital Capital Management LP, also known as Galaxy Asset Management.
FTX Trading Proposes Alliance With Novogratz’s Galaxy Digital
FTX aims to onboard Galaxy Asset Management to oversee a portion of its crypto holdings. Debtors insist with Galaxy’s deep-rooted expertise in the digital asset realm, the bankrupt entity and its debtors deem the firm perfectly suited for the role.
Under this potential partnership, Galaxy’s responsibilities would encompass managing FTX’s digital assets, furnishing strategic counsel, executing trades, and adeptly maneuvering to prevent adverse price fluctuations from bulk asset sales. Additionally, the firm intends to optimize the value derived from sales by hedging these crypto assets.
For their services, Galaxy would earn a remuneration structured as management fees, derived from the assets’ value and revenue from asset sales. The proposal also stipulates provisions for expense coverage and mutual safeguard clauses. FTX asserts that the anticipated compensation aligns seamlessly with the projected service deliverables.
Interestingly, Galaxy isn’t just an external party; they’re also a creditor to FTX with a staggering million tied up with the now-obsolete exchange. As a result, FTX, along with its debtors, seeks the court’s green light to formalize the investment service accord under sections 105(a) and 363(b) of the Bankruptcy Code.
FTX is confident that this partnership with Galaxy exemplifies its sound business acumen. It is perceived as a pivotal move to both safeguard and amplify the worth of its digital assets amidst the ongoing bankruptcy ordeal.
“Galaxy Asset Management has extensive experience in areas relevant to digital asset management and trading, including with respect to the types of transactions and investment objectives contemplated,” the court documentation underscores.
What do you think about FTX attempting to partner with Galaxy for funds management? Share your thoughts and opinions about this subject in the comments section below.
Market Analyst Heralds the Collapse of ‘Everything,’ Calls for Hedging in Gold and Silver Before There Isn’t Any Left
Egon von Greyerz, market analyst and founder of Matterhorn Asset Management, is predicting the collapse of the central bank system in the next few years due to an increasing issuance of currency and debt. Von Greyerz states that in the face of an economy with no buyers, the only hedge will be tangible assets, including gold and silver.
The Collapse of ‘Everything’
Egon von Greyerz, the founder of Matterhorn Asset Management, has recently expressed his worries about the situation of the central banking system in an article titled “The Everything Collapse,” where he details how the economy could collapse in the coming years, calling for people to hedge their savings in gold and silver.
Von Greyerz states that the current macroeconomic problems are derived from the uncontrolled issuance of fiat money and debt, manipulated by the movements of central banks.
He believes that the 2008 market collapse, the subprime mortgage crisis, the wild swing in the rates of treasuries, and the inflation boom have all been produced by the current central banking system. Von Greyerz states:
The debt which has built up has now reached levels which means the financial system is now too big to survive.
Von Greyerz explains that central banks are vigilant to stop bank collapses, as evidenced by what already happened with Silicon Valley Bank and Credit Suisse. However, he believes the issued controls, like the insurance set by the Federal Deposit Insurance Corporation (FDIC), which insures only 0.7% of the trillion in deposits, are posed to fail.
This means governments will have to start printing more money in order to save the system.
Gold and Silver: The Ultimate Hedge
In his article, Von Greyerz notes that all assets are priced at the margin, and while investors exit the stock market and other markets, like the real estate market, it is possible for assets to plunge by 70% or even to zero. He states:
If there is one seller and no buyer in the housing market, the price of all houses will go to zero. The same is true for the stock market. But as investors run for the exit, most will not get through since there will at some point be no buyers at any price.
In this hypothetical situation, Von Greyers recommends paying all debts in order to avoid suffering bank repossessions, and jumping to tangible assets. However, in the long run, he recommends a flight to safety by investing in precious metals like gold and silver, before the demands leave the current supply at zero. He concluded:
Currently, all production is absorbed and any increase in demand cannot be met by increased supply but only by much higher prices. We could reach a situation when there is no silver or gold available at any price.
What do you think about the potential collapse of the financial system discussed by Von Greyerz and the value of gold and silver as protection for investors? Tell us in the comments section below.
Barron’s Recommends Hedging A Stock Portfolio, But What About Bitcoin?
Barron’s, an American finance publication operated by Dow Jones & Company, has given a rare suggestion to its audience to hedge their stock portfolios ahead of the upcoming election. The risk hanging over the market could also be responsible for the recent collapse in Bitcoin.
Given the recommendation, how should crypto investors consider hedging their portfolio too? Or should stock market investors consider hedging against uncertainty with Bitcoin?
Barron’s Warns Of Stock Market Decline, Recommend Hedging Portfolio Ahead Of “Weird” Election
In a new report from financial market magazine Barron’s, the firm advocates hedging a stock portfolio against the coming uncertainty surrounding the 2020 presidential election.
“Portfolio hedging is something we rarely endorse because most investors are terrible at it, and the market generally prices downside put options with such intense fear premiums that most people stand a better chance of winning the lottery,” the report starts off with.
Even with lottery-like odds, Barron’s is still saying it is wise for even unskilled investors to try to hedge their portfolio against risk. Barron’s is recommending “put” options on the S&P 500 as the ideal hedge, but there are several ways an investor can hedge against risk.
Related Reading | VIX Raising “Red Flag” On Stocks, Could Be Bearish For Bitcoin
For example, investors are currently taking profit on all of these assets and fleeing into cash in preparation for uncertainty. It prompted the S&P 500 and Bitcoin to sell-off over the last 24 hours after reaching 2020 highs.
Barron’s points to election results that are likely to be heavily contested, leading to a prolonged showdown and stressful situation for investors.
They also highlight how tensions in the United States surrounding political and racial views have led to protests, violence, and the highest increase in gun ownership in years.
Lastly, they call out how the VIX – a measure of expected stock market volatility – always rises during election years, and that this year is especially heightened due to the pandemic.
BTCUSD Versus S&P 500 Versus VIX Daily Comparison Chart | Source: TradingView
How Can Crypto Investors Hedge Their Bitcoin and Altcoin Portfolios Against Risk
As for how crypto investors can hedge their portfolios, there’s always cash, Tether, or simply holding Bitcoin for the long haul. If things get particularly bad in markets ahead of the election, high-risk altcoins may take the brunt of the beating.
Related Reading | This Monthly MACD Bearish Divergence Warns Of Imminent Bitcoin Crash
Crypto investors would be wise to reduce altcoin exposure if Bitcoin continues to decline. Crypto investors that are holding spot Bitcoin, can potentially open a short position to hedge against any coming drawdown.
Finally, the most confusing factor in Bitcoin’s use as a hedge against inflation and economic uncertainty. Some have called it an insurance policy of sorts, but the fact remains that Bitcoin is unlike other assets, and given the asset’s scarcity and recent halving, it could be immune to the impact of the election.
If Bitcoin can rise during even the most uncertain times the world has ever faced, stock market investors may seek to hedge with Bitcoin, much like Nasdaq-listed MicroStrategy has.
Whatever way an investor chooses to hedge, Barron’s advice remains valuable: It is time to hedge against the election, any way you can.
Bitcoin Price Watch; Hedging The Dip
So it’s time to put forward the next of our bitcoin price watch analyses – this time for a Thursday morning European session. This week has not been a good one. Neither was last week, but this one hurts that little bit more given that price has now fallen and held below the ,000 mark – a level that people have been watching closely as a key psychological threshold.
This suggests that – at least near term – we might see some further weakness in the markets as price pushes forward into the session today.
As we always say, however, there’s really nothing we can do outside of push forward with an intraday approach and hope that if things do continue to weaken, we are able to hedge with a downside entry in the direction of the decline.
So, with this all said, let’s get some levels in place that we can use for the session going forward. As ever, take a quick look at the chart below before we get started. It’s a one-minute candlestick chart and it’s got our primary range overlaid in black.
As the chart shows, then, the range that we are looking at for the session today comes in as defined by support to the downside at 9512 and resistance to the upside at 9660.
This is a pretty tight range, so we’ll be looking at sticking with a breakout trade for the time being as opposed to bringing both a breakout and an intrarange strategy into play.
In line with this, then, we’ll try and get in long on a close above resistance, targeting 9800 to the upside with a stop at 9620.
Looking short, a close below support will signal a short entry towards 9400. A stop on this one at 9550 works well.
Let’s see how things play out and we’ll revisit a little bit later today.
Happy trading!
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Bitcoin Price Watch; Hedging The Decline
Bloodbath. That’s the only way to really describe what’s happening in the bitcoin price and wider crypto space right now. Coins are down pretty much across the board, with pretty much every token or digital asset taking a hit on the back of a spate of fundamental developments.
South Korean regulations came into force, Facebook decided to ban crypto ads and sentiment is incredibly weak.
But never fear.
Corrections are just something we’ve learnt to live with in the cryptocurrency space and it’s something that many have ridden out in the past and that – almost certainly – we’ll have to ride out going forward.
And when you step back and look at the big picture, bitcoin was below ,000 this time last year. We’re looking at close to 1000% on that pricing – not a bad return.
Anyway, let’s try and get some levels in place that we can use for the session going forward. We’re going to try and make the most of a bad situation and, with any luck, hedge against any further downside action if and when it materializes.
So, as ever, take a quick look at the chart below before we get started so as to get an idea where things stand right now (warning: it’s not pretty).
As the chart shows, then, the range that we’re looking at for the session this morning comes in as defined by support to the downside at 10090 and resistance to the upside at 10250.
We’re going to get in to a long trade if we see price close above resistance. On this one, we’ll target 10500 with a stop at 10200 in place to define risk.
Looking the other way, we’ll jump in short on a close below support towards a downside target of 1000 flat. A stop at 10120 looks good on this one.
Let’s see what happens.
Happy Trading!
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Bitcoin Price Watch; Hedging The Dips
So that’s another day of trading complete in our bitcoin price trading efforts and there’s really only one word for what’s happened in the bitcoin price (and, indeed, across pretty much the entire crypto spectrum) – bloodbath. We’d love to be saying that we’re heading into the festive period on a high and, in turn, that there’s plenty to be excited about moving forward into the new year. One of these things is true. The latter one. The first, not so much.
Anyway, there will be plenty of people complaining today so let’s not add to the list – instead, lets’ try to take advantage of the action we are seeing with some nimble intraday trades.
So, then, as ever, before we get started, take a quick look at the chart below to get an idea where things stand. It’s a one-minute candlestick chart and it’s got our primary range overlaid in green.
As the chart shows, then, the range we are going to be using for the session today comes in as defined by support to the downside at 12422 and resistance to the upside at 12670.
We are going to stick with our standard breakout strategy (that is, in and out on breaks and subsequent closes above and below key levels) so our two target trades for this evening are as follows:
We’ll be in long towards an immediate upside target of 12800 if we see price close above resistance. A stop on the trade somewhere in the region of 12630 will ensure we get taken out of the position in the event of a bias reversal.
We will try and get in short on a close below support, targeting 12350 to the downside and placing a stop at 12440 to keep things tight from a risk management perspective.
See you on the other side.
Charts courtesy of Trading View
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Bitcoin Price Watch; Hedging the Dips
So that’s another weekend gone and all of a sudden a fresh week of trading is underway in the bitcoin price. It’s been a pretty wild ride over the last few weeks and especially as relates to the last five or six days, with price soaring to fresh all-time highs before correcting pretty substantially towards current levels in and around the ,000 mark.
Nobody can really say with any certainty what’s going to happen from here but, if our strategy is to be trusted, it doesn’t really matter all that much. So long as price eventually resumes its longer-term overarching upside momentum then we can pretty happily trade any intraday volatility with our breakout strategy and hedge against any downside runs on the longer-term charts.
So, with that said, let’s get some levels in place that we can use to draw a profit from the market today. As ever, take a quick look at the chart below before we get started so as to pick up an idea where things stand and where we are looking to jump in and out of the markets according to the rules of our strategy.
As the chart shows, the range we are looking at for the session today comes in as defined by support to the downside at 16400 and resistance to the upside at 16569. We are going to stick with our standard breakout approach for the time being, so if we see price break above resistance, we will enter longer towards an immediate upside target of 16620. A stop loss on the position somewhere in the region of 16540 will ensure we are taken out of the trade in the event that things turn against us.
Looking the other way, if we see price close below support, we will enter short towards a downside target of 16320.
Let’s see what happens.
Charts courtesy of Trading View
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