Crypto Investment Strategies For Montreal Investors - Many cryptocurrency investors have bought Bitcoin and other altcoins with the assumption that they will be held in their portfolio for decades. The assumption of these "hodlers" is that the Bay Street and Wall Street banks of future financial transactions will be replaced by decentralized systems.
For other investors, this statement may not be true and they are just bullish on Bitcoin and want to benefit from short-term moves. Since they are not interested in the longer-term outlook, opening an account on a crypto exchange and learning the difference between a hot and cold wallet is not on their to-do list.
Crypto Investment Strategies For Montreal Investors
Fortunately, the rise in popularity of Bitcoin has led to exchanges offering investors exposure to the digital currency through exchange-traded funds, or ETFs. This means that investors can be indirectly exposed to the price movement of Bitcoin through registered and unregistered brokerage accounts.
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The Bitcoin ETF is no different from other ETFs that trade on an exchange. The financial product is designed to provide equity investors with exposure to the price movement of Bitcoin. If the price of Bitcoin rises by 3% in one day, investors can reasonably expect that the ETF will provide a similar return.
As a reminder, call options give the holder the right (but not the obligation) to buy or sell a stock or ETF at an agreed price within a specified period of time. Options are also a cheaper option compared to buying the asset outright, especially if it is very expensive.
Bitcoin started 2022 trading north of US$40,000, meaning that the average investor may not be able to afford to buy a single Bitcoin. The same concept applies to high-priced stocks like Shopify, which breached the $500 level in 2020 and traded as high as $1,762.92 in 2022.
Let's assume that the value of Bitcoin has fallen to $35,000 per coin and the investor's ability to bounce back to the $40,000 support level by the end of next month. An increase in the price of Bitcoin represents a 14 percent increase in value, so the investor must buy a call option on the Bitcoin ETF, whose strike price represents a similar 14 percent gain.
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Instead of investing tens of thousands of dollars in Bitcoin, the investor found a cheaper way to benefit from Bitcoin's profits through ETF options.
It is also important to note that buying options on a Bitcoin ETF can be a way to protect yourself from potential adverse effects. Bitcoin and other cryptocurrencies have shown extreme volatility in both directions. Fortunately, buying put options can protect against positions that lose value.
Consider again an investor who owns one Bitcoin and believes that the sentiment is turning from bullish to bearish. The investor believes that Bitcoin can lose 15% of its value within a month and they would like to profit from this scenario.
Instead of adding to their position, an investor can buy a put option on a Bitcoin stock with an exercise price 15% below where the stock is trading. If the investor's thesis is correct, a correction in Bitcoin's price will lead to an increase in the value of the put option. This near-term profit can be used to offset some or all of the losses the investor faces on their original Bitcoin position.
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Bitcoin's high price is one of the reasons why investors stay away. However, trading Bitcoin through derivative markets such as options offers retail investors the opportunity to benefit from price fluctuations without having to own the digital coin directly.
The strategies presented in this blog are for informational and educational purposes only and should not be construed as recommendations to buy or sell any security. As always, you should ensure that you are comfortable with the proposed scenarios and are prepared to take all the risks before implementing an option strategy.
Copyright © 2022 Bourse de Montréal Inc. All rights reserved. Do not copy, distribute, sell or modify this document without the written permission of Bourse de Montréal Inc. This information is for information only. The views, opinions and advice expressed in this article are those of the individual author. Neither TMX Group Limited nor any of its affiliates warrants the completeness of the information contained in this publication and we are not responsible for any errors or omissions in connection with the use of or reliance on the information. This publication is not intended to provide, and should not be relied upon as, legal, accounting, tax, investment, financial or other advice. The information provided is not a solicitation to buy securities listed on the Montreal Exchange, the Toronto Stock Exchange and/or the TSX Venture Exchange. TMX Group and its affiliated companies do not endorse or recommend the securities referred to in this publication. Montréal Exchange and MX are trademarks of Bourse de Montréal Inc. TMX, TMX design, The Future is Yours to See. and Voir le futur. Realiser l'avenir. are trademarks of TSX Inc. and are used under license. TickSmith's Data Web Store platform enables BlockFills institutional investors to access and purchase digital asset ownership data to support their investment strategies.
Montreal, QC-TickSmith today announced a partnership with BlockFills, a fast-growing global cryptocurrency and digital asset technology company. The partnership allows BlockFills to deploy TickSmith's Data Web Store platform and monetize the company's digital asset and cryptocurrency market data. This integration comes alongside BlockFills' first advanced SaaS cryptocurrency technology, which includes interfaces Vision, Zephyr and Phoenix.
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With TickSmith's Data Web Store platform, institutional investors can now purchase cryptocurrency market data at any time in addition to executing market orders.
BlockFills successfully launched Vision, Zephyr and Phoenix trading solution products in 2021, designed to help institutional clients such as hedge funds, asset managers, trading groups, investors, brokers, banks and corporates access the company's proprietary cryptocurrency trading technology and liquidity.
The technology used by BlockFills solves the fragmentation problems of market liquidity and offers institutional investors targeted trading lifecycle solutions between spot and derivative products. Now, TickSmith's Data Web Store platform provides these investors with another source of added value to their investment strategies.
Nick Hammer, CEO of BlockFills, says, "TickSmith's Data Web Store platform helps us provide an enriched and seamless data buying experience where market intelligence is easy to find for our customers." He continues, "This partnership gives institutions access to information that can help them make smarter digital asset investments through our API, web interfaces or mobile apps. This partnership is another step to help create the most seamless, secure and informed institutional digital asset trading platform in today's cryptocurrency market."
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TickSmith's Enterprise Data Web Store is a B2B SaaS platform that enables a white-label e-commerce data buying experience by providing all the necessary tools to prepare, manage, package and monetize data unlike any other solution on the market today.
Francis Wenzel, CEO of TickSmith says, "Information is even more valuable when it's easy to find, buy, and use. Our platform provides an out-of-the-box e-commerce shopping experience that's customizable and can be tailored to any need beyond white labeling. This isn't just beneficial for BlockFills, but also for all organizations and data analysts who can now access their data.”
BlockFills is a disruptive financial technology company dedicated to providing end-to-end solutions to global cryptocurrency market players. The company has successfully built and deployed a state-of-the-art multi-asset technology platform that solves major liquidity fragmentation issues in the market. The platform offers price discovery, price aggregation, electronic order matching, intelligent order routing and trade matching solutions for digital spot and derivatives market institutions. In addition, BlockFills offers software as a service (SaaS) solutions that simplify all aspects of the trade life cycle for institutions in the industry.
Based in Chicago and founded in 2018, BlockFills' digital asset technology already serves more than 600 institutional clients in 50 countries.
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TickSmith's mission is to enable organizations to easily share and monetize their data with internal users, private members or external customers. Selling data should be as simple as selling products in an online store, and TickSmith simplifies the online trading and distribution experience for data buyers and provides the necessary tools for data producers to aggregate, package, aggregate and monetize data.
Prepare, compress and deliver data from anywhere to anyone to realize the full value of your data. The demand for professionally managed portfolios of bitcoin and other digital currencies is being met by new financial talent.
Larry Newhook, a veteran investor with over 20 years of experience, is taking his second swing at the emerging markets of bitcoin and other cryptocurrencies. DigitalArray, his new asset management company that launched in June, offers management of crypto portfolios for high-net-worth individuals – a growing specialty.
Newhook abandoned his first venture three years ago after his team ran into a problem: They couldn't find enough invested people to take on an unpredictable, volatile industry that still relies on largely misunderstood blockchain technology.
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