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Introduction
The Bitcoin Volatility Premium AMC, an innovative investment product, has quickly become the largest actively managed bitcoin-only financial product in Europe and the second largest globally. Despite this achievement, to date this bitcoin-only AMC has flown under the radar and has received no media coverage to date until now. What makes this investment product offering particularly interesting is its dramatic rise was due to the seed investment of $50 million to launch from an enigmatic early Bitcoin miner from 2010. The product is designed to curb Bitcoin's volatile pricing, fostering its adoption as a reliable medium of exchange.
What is an AMC?
AMC stands for Actively Managed Certificate. It is a type of structured security that is popular in Europe. Jurisdictions such as Luxembourg and Jersey allow asset managers to create these certificates in order to raise capital from investors. Certificates provide a "wrapper" for an investment strategy, or specific underlying assets. The certificate is sold to investors, and the capital is used to implement the strategy.
Who is the Mysterious Whale?
In response to inquiries about the identity of the Bitcoin Whale behind the new Bitcoin Volatility Premium AMC, Zeltner & Co. confirmed that the seed investor is indeed an early Bitcoin miner who has been involved in Bitcoin since 2010. However, respecting the investor's request to preserve privacy and avoid public scrutiny, Zeltner & Co. declined to reveal any further details about their identity. The motives behind such a significant move by an individual with substantial Bitcoin holdings are particularly intriguing. The creation of this AMC, aimed at stabilizing Bitcoin's price, showcases a strategic approach to managing digital assets. By personally allocating their holdings to develop this investment product, the Bitcoin Whale not only addresses the issue of Bitcoin’s volatility but also enhances its viability as a stable medium of exchange. This AMC stands out as a unique market-making instrument that not only seeks to manage risk but also differentiates itself through its operational approach, targeting a more stable and predictable market for Bitcoin.
Why is this AMC Relevant?
The Bitcoin Volatility Premium AMC has already become the largest actively managed bitcoin-only financial product in Europe and the second largest globally after the Purpose Investments Bitcoin Yield ETF (BTCY), with over $109 million CAD ($80.750 U.S.). There are several large Bitcoin ETFs that actively manage futures positions, such as the ProShares Bitcoin Strategy ETF (BITO), with over $2.82 billion in assets under management; however, these are not actively managed funds in the traditional sense. Instead of trying to outperform or optimize the risk/return of a direct investment in bitcoin, futures ETFs aim to track the price of bitcoin 1:1.
How is its Investment Strategy Unique?
The certificate invests algorithmically in bitcoin and U.S. dollars, aiming to collect a volatility premium while optimizing the risk-return profile directly by investing in bitcoin. The strategy provides liquidity to the BTC/USD spot market with market making on leading exchanges such as Kraken. This leads to small gains, which can accumulate between 2% and 6% per annum, depending on volatility. The volatility premium is generated when the market moves from filling the buy orders generated by the algorithm to filling the sell orders, and vice versa. The algorithm buys low and sells high at each dip or peak, respectively.
Market Impact and Future Prospects
The goal of the Bitcoin Volatility Premium AMC is to mitigate the price fluctuations of Bitcoin, making it more stable and functional as a medium of exchange. Dr. Demelza Hays, a portfolio manager at Zeltner & Co., shared insights with Bitcoin Magazine Pro: "Bitcoin's potential to become a global medium of exchange and money hinges significantly on achieving stable purchasing power. Currently, the volatility inherent in Bitcoin's price poses a barrier to its widespread adoption for everyday transactions. However, if Bitcoin were to stabilize in value, it could emerge as a viable alternative to traditional fiat currencies, offering benefits such as decentralization, security, and lower transaction costs on Bitcoin scaling solutions such as Liquid, AQUA, and the Lightning Network."
Swiss Family Office Involvement
The strategy is managed by the prestigious family office Zeltner & Co., based in Zurich, Switzerland. Founded by Thomas Zeltner, Zeltner & Co. is continuing the legacy of Thomas’s father, the late former president of UBS' wealth management, Jürg Zeltner. Zeltner & Co., renowned for its discretion and expertise in wealth management, has lent credibility to this venture, solidifying confidence in the strategy's legitimacy and potential for success.
Regulatory and Geographic Advantage
Choosing Zurich, Switzerland for its headquarters, the AMC benefits from the region's favorable regulatory environment and its reputation as a global finance and innovation hub. This strategic location enhances the security and appeal of the Bitcoin Volatility Premium AMC to investors seeking to diversify into digital assets.
Conclusion
The launch of the Bitcoin Volatility Premium AMC comes at a time of heightened interest, with bitcoin recently surpassing all-time highs and capturing the attention of institutional investors and mainstream media alike. As the market continues to mature and attract greater institutional participation, the emergence of innovative investment vehicles such as this certificate highlights the evolving nature of digital asset management.
Frequently Asked Questions
Is gold a good investment IRA option?
If you are looking for a way to save money, gold is a great investment. It's also a great way to diversify your portfolio. But gold is not all that it seems.
It has been used throughout history as currency and it is still a very popular method of payment. It is often called “the most ancient currency in the universe.”
But gold, unlike paper currency, which is created by governments, is mined out from the ground. This makes it highly valuable as it is hard and rare to produce.
Gold prices fluctuate based on demand and supply. When the economy is strong, people tend to spend more money, which means fewer people mine gold. The result is that gold's value increases.
On the flip side, people save cash for emergencies and don't spend it. This increases the production of gold, which in turn drives down its value.
This is why gold investment makes sense for both individuals and businesses. If you have gold to invest, you will reap the rewards when the economy expands.
Your investments will also generate interest, which can help you increase your wealth. You won't lose your money if gold prices drop.
What precious metal is best for investing?
Answering this question will depend on your willingness to take some risk and the return you seek. Although gold has been considered a safe investment, it is not always the most lucrative. Gold may not be right for you if you want quick profits. You should invest in silver if you have the patience and time.
If you're not looking to make quick money, gold is probably your best choice. If you want to invest in long-term, steady returns, silver is a better choice.
How is gold taxed within an IRA?
The fair market value of gold sold is the basis for tax. You don't pay taxes when you buy gold. It is not considered income. If you sell it later, you'll have a taxable gain if the price goes up.
Loans can be secured with gold. When you borrow against your assets, lenders try to find the highest return possible. For gold, this means selling it. It's not guaranteed that the lender will do it. They might keep it. They may decide to resell it. In either case, you risk losing potential profits.
You should not lend against your gold if it is intended to be used as collateral. If you don't plan to use it as collateral, it is better to let it be.
Should You Invest Gold in Retirement?
It depends on how much you have saved and if gold was available at the time you started saving. You can invest in both options if you aren't sure which option is best for you.
You can earn potential returns on your investment of gold. Retirees will find it an attractive investment.
Most investments have fixed returns, but gold's volatility is what makes it unique. As a result, its value changes over time.
However, this does not mean that gold should be avoided. It just means that you need to factor in fluctuations to your overall portfolio.
Another benefit to gold? It's a tangible asset. Gold can be stored more easily than stocks and bonds. It can also be carried.
As long as you keep your gold in a secure location, you can always access it. Physical gold is not subject to storage fees.
Investing in gold can help protect against inflation. It's a great way to hedge against rising prices, as gold prices tend to increase along with other commodities.
Also, you'll reap the benefits of having some savings invested in something with a stable value. Gold tends to rise when the stock markets fall.
Gold investment has another advantage: You can sell it anytime. Like stocks, you can sell your position anytime you need cash. It doesn't matter if you are retiring.
If you do decide to invest in gold, make sure to diversify your holdings. Don't put all of your eggs in one basket.
Don't buy too many at once. Start with just a few drops. Next, add more as required.
Keep in mind that the goal is not to quickly become wealthy. Instead, the goal is to accumulate enough wealth that you don't have to rely on Social Security.
Gold may not be the most attractive investment, but it could be a great complement to any retirement strategy.
Statistics
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
External Links
irs.gov
wsj.com
- Saddam Hussein's InvasionHelped Uncage a Bear In 90 – WSJ
- Want to Keep Gold in Your IRA at Home? It's not legal – WSJ
investopedia.com
law.cornell.edu
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement accounts
How To
3 Ways To Invest in Gold For Retirement
It's essential to understand how gold fits into your retirement plan. There are several options to invest in precious metals if your employer has a 401k. You might also consider investing in gold outside your workplace. If you have an IRA (Individual Retirement Account), a custodial account could be opened at Fidelity Investments. You may also want to purchase precious metals from a reputable dealer if you don’t already have them.
If you do invest in gold, follow these three simple rules:
- Buy Gold with Your Money – You don't need credit cards, or to borrow money to finance your investments. Instead, deposit cash into your accounts. This will help to keep your purchasing power high and protect you against inflation.
- Physical Gold Coins You Should Buy – Physical gold coins should be purchased over a paper certificate. Physical gold coins can be sold much faster than paper certificates. Physical gold coins don't require storage fees.
- Diversify Your Portfolio. Never place all your eggs in the same basket. By investing in multiple assets, you can spread your wealth. This reduces risk and allows you to be more flexible during market volatility.
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By: Mark Mason
Title: Mysterious 2010 Bitcoin Whale Launches Bitcoin-Only Market-Making Certificate
Sourced From: bitcoinmagazine.com/markets/mysterious-2010-bitcoin-whale-launches-bitcoin-only-market-making-certificate
Published Date: Mon, 29 Apr 2024 14:02:16 GMT
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