There is a financial revolution on the way. A revolution born out of the need for greater accountability and transparency in the financial industry. A revolution born on the disintermediation and decentralization of banking services and underpinned by technological tour de force, Bitcoin.
Bitcoin has grown in leaps and bounds over the past few years, from a proof-of-work concept to the foundation of a market that scaled above the $300 billion mark. With the currency gaining widespread adoption by both financial establishments and governments, and analysts billing it the futures of money, Bitcoin is poised for greater heights. However, despite enjoying high trading volumes and commanding record-breaking capitalization on the market, Bitcoin remains a highly volatile currency. This has deterred many a would-be investor from entering the market and adding the currency to their portfolio.
Investors would like to have a tool that can help them reduce the volatility of their investments based on technical and market patterns, while minimizing their exposure to risk. Such a tool is what online Swiss bank, Swissquote has developed.
Designed as an exchange tradeable certificate, the Active Bitcoin Certificate reduces exposure to market volatility by enabling investors to move their holding between Bitcoin and U.S dollar through a proprietary machine-learning algorithm. This quantitative algorithm analyzes technical patterns, realized volatility measures, buy/sell pressure and social media sentiments to reduce volatility through the increment of the amount of fiat (in USD) held during periods of uncertainty and downturns.
Using the data gathered from these indicators, the algorithm predicts the short-term direction of future returns for investors to hedge or cash in on the current market trend. Swissquote allocates between 60% and 100% of the portfolio to bitcoin, based on the level of predicted market confidence and projected future direction. The remaining portfolio balance is invested in the US dollars. This lower volatility strategy will help investors balance out the inherent risk of Bitcoin investment volatility, decreasing volatility and creating more consistent potential returns on investments.
As an equity vehicle, Swissquote’s Active Bitcoin Certificate seamlessly fits into any stock trading account and is easily trackable and tradeable on six Swiss exchanges. The certificate also addresses the security concerns associated with most exchange platform through a world-class cybersecurity unit that handles the end-to-end security of all funds deposited on the platform. The team also secures users private keys, storages, and wallets, eliminating third-party intrusion.
Featured image from Shutterstock.
Last modified: December 25, 2017 09:08 UTC