How to make money on BTCV token?

Guide to BTCV price management mechanism

Liquidation — the deepest fear of margin traders. Officially, it’s a forced order placed by exchange. Unofficially, it’s a mechanism for controlling the price of any asset.

Liquidation engine can be used for price control if liquidation happens according to “mark price” rather than “last trade price”. In other words, if somebody opens a short position for entire balance at price X, but then mark price jumps to 2X, his short position would still be liquidated even if no other trade happens on the market — because the engine makes a decision to liquidate his position based on mark price, not last trade price.

The mark price comes from a variety of sources. For Bitcoin Volatility Token, mark price comes from Bitcoin Volatility Index calculated over last 24 hours & multiplied by $0.01. For XBTUSD contract on BitMEX, mark price comes from Bitcoin spot index over 3 exchanges plus decaying funding basis rate.

Due to differences in mark price calculation, each derivative has its own trading strategies. Compared to XBTUSD, Bitcoin Volatility Token (BTCV) has a simple chart with an obvious buy zone under $0.03. Therefore, making money on BTCV token is as simple as buying when both mark price & last trade price is low (= when Bitcoin volatility is low), and then selling into the liquidation of a short position.

You can even place your sell order in advance — the liquidation engine will automatically fill it during the execution. For example, if you place a sell order at $0.10, and liquidation happens at $0.12, your sell order will be filled.

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