Now you can invest in bitcoin without volatility
Swissquote Bank SA introduced an exchange product designed to mitigate the effects of bitcoin volatility by switching between this crypto currency and dollars.
The Swiss operator of the electronic trading platform calls its product the first actively managed certificate for bitcoin. The funds will be transferred from the digital currency to the cache and back on the basis of an algorithm that uses “technical signals” and calculates moods in social networks in an attempt to predict the market. Trades will be held on the Swiss Stock Exchange SIX.
Companies specializing in online trading, hedge funds and FX-platforms launch new products related to bitcoin, seeking to take advantage of the rally, as a result of which the largest crypto currency increased eight times since the beginning of the year. At the same time, traders are looking for ways to hedge the risks of depreciation and take a flexible position after three bitcoating collapses by more than 25 percent each this year and a whole series of warnings about the “bubble”.
“Investors are excited about this crypto currency, but it’s nervous about its volatility,” Peter Rosenstreich, the head of the Swissquote market strategy, said in an interview. “Therefore, we tried to develop a trading algorithm that protects against downside risks.”
Swissquote will keep in the certificate portfolio a crypto currency and a buffer stock of dollars, ranging from zero to 40 percent depending on the algorithmic strategy, it follows from the company’s report published on Thursday. The investments are reduced to bitcoin and cache minus the management fee of 1.5 percent and trade costs.