Whether you are a fan of Bitcoin or not everyone can agree on one thing, Bitcoin is volatile. Last week the king of crypto currencies lost 14% of its value, falling to just over $10,000 a coin. Yet there is one company that 18 months ago set out to keep all the decentralised advantages of Bitcoin but improve its returns by predicting its price falls.
Bitcoin Enhanced claims to be an example of a hedge fund re-invented for the digital age. Called Self-Managed Investments (SMI’s) investors buy tokens rather than give their money to a fund manager. This eliminates the usual 2% management and 20% performance fees charged by most hedge funds. Instead token holders are expected to track the Target Price of a simulated strategy. The advantage of the strategy being simulated rather than actually trading Bitcoin, claims the company, is that like Bitcoin, the tokens have no counter-party risk and are not exposed to the systemic risk of another 2008-like financial crisis.
Over the last 18 months Bitcoin Enhanced has built an impressive track record for its predictions. On 3rd February 2018 Bitcoin stood at $8,933. Last week it was trading around $10,350. Most investors would be satisfied with the 15% return Bitcoin gave them over the period. But because Bitcoin Enhanced has successfully forecast multiple periods of Bitcoin’s price fall, its Target Price last week stood at $22,225. If you bought a Bitcoin Enhanced Classic token (CBE) as the forecasts started you would have booked a 250% gain over the period.
The most recent forecast of Bitcoin price fall, from the 11th to 15th August saw Bitcoin Enhanced capturing 9% of the drop. As a result Bitcoin Enhanced CBE token is now at a 115% premium over Bitcoin. Bitcoin enthusiasts like the way Bitcoin is decentralised with its value held on a blockchain. Bitcoin Enhanced shares the same characteristics which begs the question whether Bitcoin Enhanced tokens are a viable complement to holding Bitcoin but with the possibility of better returns.
Of course no investment is without risks and Bitcoin Enhanced is quick to point out that its success depends upon the ability of its Phi Algorithm to continue to forecast when Bitcoin prices will fall. It is also transparent about the fact that in the early days in particular, investors may have to HODL their tokens until there is sufficient liquidity on the Waves exchange to exit their position.
However for hedge-fund investors, lock-in periods are nothing new. And while traders who believe they can time the market will enter and exit Bitcoin positions according to their trading rules, Bitcoin Enhanced does this work for token holders. This encourages viewing the tokens as a medium to long term investment where early liquidity may not be top of an investor’s check list.
Refreshingly, unlike many blockchain projects, Bitcoin Enhanced is run by real people. Based out of Christchurch New Zealand, contact details, including email, phone and postal address are available on the website. The company, Forecast Services Limited is also a registered financial services provider and a member of an approved disputes resolution scheme.
So, you may or may not be a believer in Bitcoin yet you may have the desire to grow your portfolio without having more exposure to the risks of the fiat financial system. In that case Bitcoin Enhanced may be an option that has already has an enviable track record.