Operational Guide: The end of ETFs is coming, which investment strategies are suitable now?
Written by Loopy Lu
As the final "judgment" day of the Bitcoin spot ETF on January 10 approaches,cryptocurrencyMarket sentiment continues to heat up. From last night to this morning, Bitcoin spot ETF has made many major progress. BTC has also seen a sharp rise again.
At present, there are less than 24 hours left before the ETF gets the final result. When the ETF is passed, the market consensus is that there will be huge fluctuations regardless of whether it goes up or down. Bitcoin spot ETF is just one step away.
How should retail investors operate in the face of huge fluctuations? How can they profit before the upcoming potential huge fluctuations? Odaily Planet Daily sorted out the potential operation methods as follows:
Fancy lever opening
contract, leveraged trading is the easiest to operate, the most basic, and the option with the highest rate of return (or loss rate). In the face of the upcoming market fluctuations, whether you open a long or short position, if the direction is correct, there is the potential for high returns.
At present, all mainstream CEXs provide currency-basedcontract、U-basedcontract, Spot Leverage, LeverageTokenIn addition, you can also use DeFi lending to borrow stablecoins to perform on-chain leverage operations.
Odaily Planet Daily reminds investors that leverage is an extremely high-risk trading method in the crypto market.
On January 7, Vitalik Buterin posted a message on the X platform, offering his investment advice: Don’t use more than 2x leverage. Never.
In yesterday's market volatility, Coinglass data showed that the 24-hour liquidation volume of the crypto market reached $208 million. BTC liquidation exceeded $100 million. In the past 24 hours, a total of 60,036 people were liquidated, and the largest single liquidation order was worth $9.4389 million.
Long Volatility
Although it is difficult for the market to determine the specific direction of BTC after the ETF results are announced, the market unanimously predicts that the market will fluctuate violently after the announcement.
Therefore, going long on BTC volatility becomes a good option.
In the FTX era, FTX pioneered the provision of volatility to the market.TokenThis is an easy choice. FTX has collapsed and there are no similar product competitors with obvious advantages in the market.
But we still found several interesting options from the DeFi market:
Crypto Volatility Index (CVI)
CVI (Crypto Volatility Index) is the name of the Crypto Volatility Index, which is both the name of an index and the name of the DeFi project. The CVI index is designed to track the volatility of the entire crypto market. The greater the market volatility, the higher the index value. We can use an approximate but inappropriate metaphor to understand that the index is the IV of the entire crypto market.
Simply put, the project provides users with CVI tokens, the price of which is pegged to the CVI index, with built-in funding fees that are adjusted daily.
If the user predicts that volatility will increase in the future, he can buy the token and sell it after the volatility increases. If the user predicts that volatility will decrease in the future, he can mint the token and charge the funding rate for each adjustment.
Today's CVI index hourly trend
Volmex
Volmex is another DeFi protocol that provides volatility trading for users. Volmex has also launched its own crypto volatility indices, namely the BVIV Index and the EVIV Index. Unlike the CVI, which covers the entire crypto market, these two are more precise and specific to tokens, representing the implied volatility of BTC and the implied volatility of ETH respectively.
On the Volmex platform, users can trade indices, provide liquidity for indices, and perform swap transactions between Bitcoin volatility and Ethereum volatility.
Today's Volmex volatility hourly trend
Volmex aims to provide users with an easy way to obtaincryptocurrencyBased on the volatility of the stock market, users can also formulate a series of complex trading strategies based on this investment tool.
Options Trading
目前，主流 CEX、 Deribit 等中心化平台，及一些 DeFi 协议均为投资者提供了加密货币的期权市场。
Buying call/put options expiring on January 12 is the simplest option trading method to go long/short BTC.
However, it should be noted that, unlike CEX contracts, options will be forcibly settled after the delivery date. Therefore, if the price forecast is wrong, the option will be "returned to zero". (For example, when the BTC price is $40,000, a call option with a BTC strike price of 50,000 is purchased. If the BTC price is only $49,999 at that time, the premium of the option will be lost and there will be no profit).
In addition, users can also sell put options and earn premiums. However, it should be noted that option sellers are riskier roles and theoretically bear unlimited risks.
Options products are relatively complex, and investors who have not yet learned about them are advised to trade them after a thorough understanding.guide.
Of course, if you only make simple "long or short" predictions, option tools are a bit overkill. Hedging and combining with other positions (such as spot, contracts, options, etc.) and executing some strategies are where options come in handy.
How to go long on volatility with options?
Build a straddleXiaobai NavigationOptions are the simplest way to go long on volatility.
For example, when Bitcoin is $40,000, buy a $40,000 call option and a put option at the same time. For investors, this only requires two premium costs, and they can start to make profits after a sharp rise/fall, and the rise/fall is enough to cover the premium cost. The straddle combination is a simple way to go long on volatility. In theory, this is a combination strategy with limited losses (premium returns to zero) and unlimited gains (no upper limit on price fluctuations).
Straddle Option Profit and Loss Diagram
Of course, if the same operation is performed in reverse - that is, acting as an option seller - it means shorting volatility and earning premium income due to the stagnation of market volatility.
Practical Examples
Taking the current market as an example, constructing a basic straddle option combination, although there is still the possibility of profit, it seems not cost-effective.
Taking the BTC option exercised on January 12 as an example (current price 46632), using BTC-46500-CALL and BTC-47000-PUT to construct a combination requires a premium cost of about US$3,000. BTC needs to fluctuate to US$49,932 or US$43,362 before it can start to make a profit.
One-way up/down: Spread strategy
If the user has a one-way direction prediction, a bull/bear spread strategy can be executed.
Take the bull spread strategy as an example, which is to buy a lower-priced call option and sell a call option with the same exercise date but a higher price. For example, when the BTC price is $40,000, if the market is expected to be bullish in the future, you can buy a $45,000 call option and sell a $50,000 call option.
The profit space of this strategy is a limited range, and it is impossible to achieve theoretically unlimited profits. That is, it is only profitable when the BTC price stays between 45,000 and 50,000. (It is only an approximation because the cost and income of the premium need to be calculated)
Practical Examples
Compared with "buying only one call", the advantage of this strategy is that it reduces the cost of holding positions by acting as a seller. If slightly modified, it can further improve capital efficiency.
Let’s take the current market and BTC exercised on January 12 as an example.
If you buy BTC-48000-CALL and sell BTC-52000-CALL, you will have to pay a cost of about $900 and receive a premium of about $200, and the net cost of the strategy is about $700.
When the exercise date of January 12 arrives, we can make a profit if the BTC price stays above about US$48,700 and below US$52,000. However, when the price reaches above 52,000, since we are the option seller, the seller's option starts to lose money. Therefore, continued rise will cause the gains and losses of the two option orders to be hedged 1:1, and it is impossible to achieve unlimited profit increase.
So why do we still take this strategy? Note that, as mentioned above, our cost is only about $700, not about $900 for the call option, and the capital efficiency of this "two-operation" combination is an astonishing 22% higher than that of just one operation.
Is it possible to break the limits of maximum profit while improving capital efficiency?
The answer is yes, as long as you make some adjustments. In the spread strategy we just constructed, because of the "buy 1 order, sell 1 order" operation, the Delta value of the investment portfolio is approximately 0 (not equal to 0), and we just need to make Delta deviate more positively.
We can adopt the same strategy, but "buy 3 orders, sell 2 orders", or "buy 2 orders, sell 1 order", which can break the limit of maximum profit and realize a one-way bullish option strategy position.
The above strategies are just some simple and convenient strategies, but options trading carries huge risks. Odaily Planet Daily reminds users to identify risks on their own and operate with caution.
Options trading is quite mature in traditional markets, and investors can understand and learn more about options through stock options trading.
Stock Trading
Amid the upcoming high volatility, trading crypto concept stocks is another channel to bet on the crypto market.
The trend of cryptocurrency concept stocks represented by COIN has always been correlated with the cryptocurrency market. The more mature and easily available investment tools in the stock market also provide us with more possibilities to bet on the crypto market. Whether you are going long, short, or doing volatility, it is a good choice to find some crypto stocks as the target of operation.
Comparison of COIN and BTC trends
In addition to COIN, the leader, there are also a series of crypto mining companies, "alternative BTC leveraged tokens" MicroStrategy, Grayscale GBTC shares and other channels available for operation.
In addition, if GBTC is approved, the price difference between GBTC and BTC is also a potential arbitrage space. Currently, GBTC has a negative premium of 6.82%.
GBTC premium rate changes in the past 3 months
CEX Products
In addition to cryptocurrency trading, what other services can CEX provide? Robot products and financial products are both good choices.
Grid trading is an extremely effective strategy amidst the market's repeated fluctuations.
The grid strategy is a method of taking advantage of market fluctuations to make profits. In a market where the price of the underlying asset is constantly fluctuating, the grid strategy will automatically buy/sell to earn profits every time the market price touches the preset grid line price.
Taking OKX as an example, the grid strategy under the default sorting, the top ranking, and the official launch have all achieved good returns in the previous volatile market.
Financial products are also a good choice.
Recently, market sentiment has been in a strong and positive state. Under such circumstances, investors are eager to increase leverage, and various loan products have seen a large demand for loans. Therefore, loan interest rates remain high.
Corresponding to this is the high return that the lender earns without doing anything.
Taking OKX as an example, the current annualized yield of OKX stablecoin investment is 8%. In the past 30 days, this figure has soared to 58% and has been above 20% for a long time. Under the strong market sentiment, the stablecoin investment of each CEX is a good choice with relatively low risk.
OKX USDT financial 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 the Polygon market and the Optimism market.
Aave Optimism USDC Interest
Aave Polygon USDC Interest
ETFs are coming, what should I do?
Currently, the only factor that affects whether the Bitcoin spot ETF is passed is the attitude of the SEC members who are eligible to vote (including Gary Gensler, a total of 5 people) and the result of the vote. No one can know the final result of the ETF, and this event is almost unpredictable.
For the majority of investors, paying attention to risks and keeping an eye on positions is still the best option.
There are still differences in the market's predictions on the success or failure of ETFs. What will be the final result? The result will be revealed within 24 hours.
The article comes from the Internet:Operational Guide: The end of ETFs is coming, which investment strategies are suitable now?
OKX Yield Hunter is as simple as a financial product, and users can easily participate in options in the future. For most users, option products are difficult to understand and they will not play them no matter how good they are. As an effective hedging tool, options can help users lock in the maximum risk and pursue higher profits. There are a wide range of institutional and professional users in the traditional financial field, but in the relatively early crypto industry, options are still...
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