Profitable investment strategy through bull and bear, a “compound interest machine” Buffett would approve
Bloody March has finally passed, whether you are a traditional or crypto investor, it has been a painful month.
The epidemic continues to spread while the global economy plummets. Due to the liquidity crisis, US stocks have ushered in four “fuse cuts”. There have only been five occurrences in history, and four of them occurred in the last month. Bitcoin has also hit its “single day’s heaviest decline” since 2014. Bitcoin fell to a minimum of $3,800 in less than 24 hours from $8,000 on the night of March 12.
In the face of a sharply plunging market, are there still ways to avoid risks or make profits besides shorting spots and futures?
Yes, but let’s examine the portfolio first.
In previous articles, Bincentive has emphasized the concepts of asset allocation and portfolio diversification to avoid extreme markets. This plunge may be an opportunity for everyone to take a good look at his investment strategies and asset allocation. Bincentive has also launched many products, including mirror trading, The Flame and The Rock of BinFi (BTC and USDT-based). These are good commodities for risk diversification.
For instance, in Bincentive’s mirror trading strategies, the average profit in this wave of decline is about 25%, with the highest close to 140%. There were only 3 strategies that net negative at about -3%. Both BinFi BTC and USDT also allow users to make stable profits with an annualized return rate of 12%.
Anything else? Lending on Bitfinex.
The greater the price volatility, the higher the profitability — Bitfinex lending
This profit model has been shared by many, as it became popular in June last year. Articles with titles that include an annualized return rate of 2X% and a passive monthly income of XX thousand were attractive.
In hindsight, because of market volatility, the annualized return rate does not realistically reach 20%.
After the Fed launched the “no limit” quantitative easing, the liquidity crisis in the US bond market was temporarily lifted. Hot money has been flowing in as US stocks, gold, and even cryptocurrencies rebound. Compared with other assets, the market value of crypto assets is smaller, so it is relatively easy to speculate. With fluctuations come transactions. Mechanisms such as Bitfinex’s lending became a necessity to traders.
Bitfinex’s lending principle is not difficult to understand. The cryptocurrency market has high volatility, and more experienced investors will use high leverages to increase profits, often times borrowing money to do so. Just like DeFi lending, the borrower needs to collaterize assets in the account. Once the loss exceeds 50% of the value of the collateral, the position will be forced to close and the money will be returned to the lender.
The reason why Bitfinex’s lending became popular last June was because the market was going bullish. Many borrowed money to try to increase their profits. Most of the traders traded on short-term basis with borrowing periods within 2–3 days.
Bincentive concludes that there are two major disadvantages to lending at Bitfinex:
1. The procedures are cumbersome. For regular investors, the process of opening Bitfinex accounts and going through KYC takes a lot of work. You will also need to understand the various options on the financing form, including filling in the financing rate, the amount of financing, the number of financing days, sending the loan form, and confirming whether the pending order is completed.
2. Lending time is too short. Since most traders trade short-term, most borrowing periods are short and within 2–3 days. You must log in frequently and look for borrowing orders with the highest interest rates.
Bincentive launches one-click USD lending
The average person isn’t a day trader. Finding the best daily interest rate every day can be tedious. Bincentive launched a one-click lending “Lending Bot” so you can automate the process 24/7. All you need to do is connect Bitfinex’s API to Bincentive so we can keep an eye out for you.
Try it for 14 days free!
https://www.bincentive.com/member/lending-bot/dashboard
Lending with Bitfinex USD is still a good investment option. Even during the current low-volatility market, the average daily interest rate is still 0.016%, which translates into an annualized return of about 6%.
In the period of high volatility, the daily interest rate can jump up surprisingly. On Feb 10, the daily interest rate was 0.08% (annualized return was 31%). In October last year, there was a record high of 7% for the day.
Asset allocation has always been the most important key to investment and financial management, especially in the highly volatile crypto market. In addition to BinFi’s stable income product and high-risk high-reward mirror trading, Bincentive launches Lending Bot to help enrich everyone’s investment portfolio.
Bitfinex is the leader of global exchanges and the issuer of the biggest stable currency USDT. Its lending function has been around since 2013. The March one-day crash has also proved that Bitfinex is a safer lending platform than current DeFi solutions.
We will continue to launch more investment products to bridge traditional finance into the crypto world.
This article expresses an independent view of Bincentive. Bincentive is not responsible for investment profits and losses, and investors should carefully consider various investment risks.
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