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Is there a way to offset Bitcoin’s volatility? KB Crypto has an answer

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Highlights

  • 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.

Bitcoin’s volatility

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.

Also read: A look at Bitcoin’s dominance and how KB Crypto is built on it

Image source: Screen Grab KB Crypto PPT

What is KB Crypto’s model?

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.

Also read: Why KB Crypto’s smart hedging strategy augurs well for crypto investors

KB Crypto success

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.

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.


 


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