One of the big problems with bitcoin in the past has been its volatility and the fact that it’s so vulnerable to price swings. At the time of writing, the volatility it’s known for has been presenting a lot of advantages for traders of the world’s number one cryptocurrency by market cap, but one brokerage firm in the United Kingdom – Marex Spectron Group Ltd. – is still looking for a way to ensure people can make money on crypto while avoiding this volatility.
Marex Releases New Bitcoin Product, but Was Now the Right Time?
The company has recently introduced a new product it’s calling an “auto callable.” Granted you have at least $200,000 to invest, you can take advantage of this product and, according to a statement released by Marex, make as much as 70 percent on your overall bitcoin investments. What’s the catch? BTC cannot undergo any serious gains in the coming weeks and months, which may be a bit difficult to avoid for many investors.
As it turns out, bitcoin is on the biggest bull run of its life, and according to many analysts, this isn’t likely to stop anytime soon. In fact, many industry experts, such as Tom Lee of Fundstrat fame, are confident that the cryptocurrency could hit a six-figure price by the time we’re ready to say hello to the year 2022, so one must wonder if this was a good time for Marex to issue such a product.
The whole goal of the auto callable is to ensure that people make money granted bitcoin remains relatively stable, which it’s not doing at press time. If the asset continues to soar, the investors at hand are not going to be able to take part in those gains. Rather, they’ll simply get their capital returned to them earlier than normal.
Furthermore, the product doesn’t appear to protect investors should the asset crash like it did three years ago. Granted bitcoin endures a heavy correction, investors stand to lose even with the “protection” of the auto callable in place.
Had this product been introduced three, four or five years ago, it might have been rather solid and may have led to heavy trading in the bitcoin arena. However, now that the asset has reached a new all-time high of $40,000 and is projected to surge even more, one can’t help but question Marex’s timing.
Boring, but Still Necessary?
Benn Eifert – chief investment officer of hedge fund QVR Advisors – doesn’t quite see the advantages of such a product at a time like this, though he still believes that there’s a market for it, even when bitcoin happens to be surging like mad. In a recent interview, he comments:
The idea that you want to sell out all the upside to get a coupon and 30 percent downside protection seems pretty unintuitive, but these kind of structures in general are wildly popular. I imagine they’ll find demand.