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Which investment strategies can retail investors choose as the ETF approval is imminent?

2024-01-10 11:18

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Original Title: "Operation Guide: ETF Endgame is Coming, Which Investment Strategies are Suitable Now"

Original Author: Loopy Lu, Odaily Star Daily

Editor's note: The Bitcoin ETF is about to announce its results tonight, and the market sentiment is high. It is conceivable that there may be violent fluctuations in the market after the results are announced. This article provides 5 operational strategies to improve capital efficiency. This article does not constitute investment advice. Investment is risky, and readers should be cautious.

As the final "trial" day of the Bitcoin spot ETF on January 10 approaches, the cryptocurrency market continues to heat up. Last night and this morning, there were major developments in the Bitcoin spot ETF. BTC also saw a significant increase again.

Currently, there is less than 24 hours until the final results of the ETF are obtained. When the ETF is approved, regardless of whether it rises or falls, the market consensus is that there will be huge fluctuations. The Bitcoin spot ETF is just one step away.

How should individual investors operate in the face of huge fluctuations? How can they profit before the potential huge fluctuations that are about to come? Odaily Planet Daily has compiled the potential operating methods as follows:

花式开杠杆

translates to

Fancy Leveraging

Contracts and leveraged trading are the easiest and most basic options with the highest potential returns (or losses). In the face of upcoming market volatility, whether going long or short, there is potential for high returns if the direction is correct.

Currently, various mainstream CEX platforms offer multiple leveraged trading options, including coin-margined futures contracts, USDT-margined futures contracts, spot margin trading, and leveraged tokens. Additionally, users can also engage in on-chain leveraged trading by borrowing stablecoins through DeFi lending protocols.

Odaily reminds investors that leveraging in the cryptocurrency market is a highly risky trading method.

On January 7th, V God posted on the X platform, providing his investment advice: "Do not use leverage greater than two times. Absolutely not."

During yesterday's market volatility, Coinglass data showed that the cryptocurrency market had a liquidation volume of up to $208 million in 24 hours. BTC liquidation exceeded $100 million. In the past 24 hours, a total of 60,036 people were liquidated, with the largest single liquidation valued at $9.4389 million.

Long Volatility

Although it is difficult to determine the outcome of BTC in the ETF market at present, the market unanimously predicts that there will be a significant fluctuation after the announcement.

Therefore, it is a good choice to go long on BTC volatility.

In the FTX era, FTX pioneered the simple choice of providing volatility tokens to the market. Currently, FTX has collapsed and there are no clear competitors with similar products in the market.

However, we still find several interesting options from the DeFi market:

Crypto Volatility Index（CVI）

CVI (Crypto Volatility Index) is the name of both an index and a DeFi project. The CVI index aims to track the volatility of the entire cryptocurrency market, with higher values indicating greater market fluctuations. To understand this, we can use an approximate but imperfect analogy - the index is the IV of the entire cryptocurrency market.

In short, this project provides users with CVI tokens, which are priced in correlation with the CVI index and include built-in funding fees that are adjusted daily.

If the user predicts that the future volatility will rise, they can buy the token and sell it after the volatility rises. If the user predicts that the future volatility will decrease, they can mint the token and collect funding rates in each adjustment.

(Today's CVI index hourly trend)

Volmex

Volmex is another DeFi protocol that can provide users with volatility trading. Volmex has also launched its own cryptocurrency volatility index, namely BVIV and EVIV indices. Unlike CVI, which covers the entire cryptocurrency market, these two indices are more accurate and specific to individual tokens, representing the implied volatility of BTC and ETH, respectively.

On the Volmex platform, users can trade indices, provide liquidity for indices, and also engage in swap trading for Bitcoin volatility and Ethereum volatility.

(Today's Volmex hourly volatility trend)

Volmex aims to provide users with a simple way to access the volatility of cryptocurrencies, and based on this investment tool, users can also develop a series of complex trading strategies.

Options Trading

Currently, mainstream CEX, Deribit and other centralized platforms, as well as some DeFi protocols, provide investors with cryptocurrency options markets.

Buying call/put options that expire on January 12th is the easiest way to go long/short on BTC in options trading.

However, it should be noted that, unlike CEX contracts, options will be settled forcibly upon reaching the delivery date. Therefore, if the price prediction is incorrect, this option will be "zeroed out". (For example, if a call option with a strike price of 50,000 for BTC is purchased when the BTC price is $40,000, and the BTC price is only $49,999 at the time of delivery, all the premium for this option will be lost, and there will be no profit).

In addition, users can also sell put options to profit by earning premiums. However, it should be noted that the option seller is a higher risk role, and theoretically the option seller will bear unlimited risk.

Option products are relatively complex. It is recommended that investors who have not yet understood them should conduct transactions after a thorough understanding. Odaily Star Daily has published a series of introductory guides to options.

Of course, if only simple "long" and "short" predictions are made, option tools may be a bit overkill. Hedging and combining with other positions (such as spot, contracts, options, etc.) and executing some strategies is where options really shine.

Grid strategy is a method of profiting from market volatility. In a market where the price of the underlying asset is constantly fluctuating, the grid strategy will automatically buy/sell every time the market price touches the pre-set grid line price to earn profits.

Taking EuYi OKX as an example, the grid strategy launched by the official team, which ranks high under the default sorting, has achieved good profits in the previous volatile market.

Recently, the market sentiment has been consistently strong and positive. In this situation, investors have been eager to use leverage, resulting in a high demand for loans across various lending products. As a result, loan interest rates remain high.

Using OKX as an example, the current annualized yield for stablecoin investment on OKX is 8%. In the past 30 days, this number has skyrocketed to 58% at its highest and has remained above 20% for a long time. In a bullish market, stablecoin investment on various CEXs is a relatively low-risk and good choice.

(OKX USDT Investment Yield Trend)

Of course, the demand for lending in the on-chain market is also quite strong. Taking Aave as an example, the average APR of USDC in the past month has exceeded 8% in both the Polygon market and the Optimism market.

(Aave Optimism USDC Interest)

Note: As an AI assistant for finding information, I am not able to provide any context or industry-specific terminology. Therefore, I have translated the Chinese characters into English characters without any interpretation or modification. Additionally, I have not translated any English words or phrases that appear in the original text, such as ZKS, STARK, and SCROLL. Lastly, I have not translated any HTML tags or characters, including those within a hyperlink.

(Aave Polygon USDC Interest)

Translation:

(Aave Polygon USDC Interest)

ETF is coming, what should I do?

The only factor currently affecting the approval of Bitcoin spot ETF is the attitude of the SEC commissioners (including Gary Gensler and 4 others) who have voting rights, and the outcome of the vote. No one can know the final result of the ETF, and this event is almost unpredictable.

For the majority of investors, being aware of risks and paying attention to position management is still the best choice.

The market's prediction of the success or failure of ETFs is still divided, what will be the final result? The answer will be revealed within 24 hours.