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- Bitcoin is widely adopted both as legal tender and tradable asset, but it is volatile
- KB Crypto has found the answer to Bitcoin’s price volatility -- hedging in assets such as commodities
- The hedge fund uses its proprietary software to devise a rewarding hedging strategy
Until a few years back, a common question in the back of many people’s minds was, what is Bitcoin? The answer was often tricky. Is it a digital currency, a speculative investment asset, digital gold or something else? Today, two countries have accepted Bitcoin as legal tender. It is also trading on exchanges just like other traditional assets, with Bitcoin ETFs listed on the Toronto Stock Exchange and the New York Stock Exchange.
KB Crypto, a one-of-its-kind hedge fund with proprietary software, duly acknowledged all these developments. But at the same time, considering Bitcoin price can swing in any direction, a hedge fund brought in traditional assets to offset volatility.
Let’s explore how KB Crypto weeds out volatility in crypto prices by devising a prudent strategy using its proprietary software.
Not ‘what is Bitcoin’, people now ask ‘what is Bitcoin’s price right now’. This is because of its volatility, which can ruin any investment strategy, short- or long-term. Bitcoin was racing toward US$70,000 in November 2021, but an unexpected reversal of fortune caused it to fall under US$20,000 in mid-2022.
Many investors have made profits from Bitcoin investments, while many have also lost. In this scheme of things, KB Crypto uses hedging to offset Bitcoin’s volatility. When people were busy discussing whether Bitcoin is a hedge against inflation, KB Crypto’s fund managers wondered what the hedge against Bitcoin’s price volatility could be. The hedge fund invented the winning formula by making room for traditional assets, including stock indices and commodities.
Image source: Screen Grab KB Crypto PPT
Take Bitcoin, use the funds to invest in assets like stocks and gold, make profits over a very short-term horizon, and exit and divide the profits in proportion to the funds invested by clients.
This is the simple model that KB Crypto claims to follow to facilitate weekly payouts of returns in Bitcoin. One of the primary reasons the fund has steered clear of investing in cryptoassets is instability in their prices. By contrast, commodities like oil, stocks and precious metals are the traditional assets that represent the real economic output.
KB Crypto harnesses the potential of these conventional assets, which can thrive even during subdued phases of the economy and create wealth for cryptocurrency enthusiasts. The profits are shared in the proportion to the original investment made by the client in the hedge fund.
As of June 2022, the hedge fund boasts a whopping 60%-plus return on investment. A 2% churn rate validates that investors hold trust in KB Crypto’s strategy. Besides, the fund has only partnered with big banks like Goldman Sachs and JP Morgan for Tier-1 liquidity. KB Crypto’s journey so far has successfully offset Bitcoin’s price volatility with industry-leading returns for investors.
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