Up until today, market sentiment has been all bull on the world’s most popular cryptocurrency, bitcoin. News of pending futures from Chicago by Christmas, price upticks, and all-time highs ignore bears altogether. Now from the Swiss comes a first set of bitcoin short notes designed to profit from price drops.
Bears Not Extinct
Bloomberg’s Quint reports, “New certificates could usher in more two-way price movement in what has largely been a one-way market so far,” referring to markets’ bull preference when it comes to bitcoin futures.
As has been widely reported, Chicago Merc (CME) will create a futures market for bitcoin before year’s end. However, bitcoiners are well aware that price fluctuations, though trending ever-upward, can rollercoaster to rather low-lows. And especially for the droves of newer investors bitcoin is bringing to market, cryptocurrencies are the ultimate scream machine.
Two Switzerland-based companies are offering a solution which is now live and available on Six Exchange AG. Billed as a world first, “structured products houses Vontobel AG and Leonteq Securities AG started separate products,” writes Viren Vaghela, “that allow investors to profit if the price of bitcoin tumbles.”
Limited Loss Potential
Vontobel’s Eric Blattmann stresses the company has “seen big demand for our long tracker certificate from investors interested in playing the upside potential of bitcoin,” he told Quint, “and now they have also the possibility to hedge their position or go short.”
Vontobel AG is no stranger to bitcoin. In operation since the early 20th century, back in 2016 Vontobel “became the first provider to offer Swiss and German investors tracker certificates on bitcoin, thus making the latter a ‘bankable asset,’” their website reveals. “In light of the strong demand, it is now increasing the investment volume from the original CHF 1.7 million to CHF 18 million” by spring of this year.
“The lopsided cryptocurrency investment playing field, historically slanted in favor of long positions, is about to be leveled,” Mr. Vaghela quotes University of Cambridge’s Garrick Hileman.
Mr. Vaghela details how “Leonteq’s product has a two-month maturity, while Vontobel’s is longer, but in both versions investors can exit early like regular exchange-traded instruments.”
Also known as “mini-futures,” they offer limited loss potential, essentially more options for investors as events happen. The ability to alter a position is key in speculation.
Leonteq’s Manuel Dürr noted, “The initial feedback has been extremely positive. Clients do very much appreciate the possibility of choosing between a long or a short investment in bitcoin,” he told Mr. Vaghela.
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Images courtesy of: Pixabay, Leonteq, and Vontobel.