A Bitcoin-Gold derivative for Institutional Investors
Crypto liquidity provider B2C2 has launched this new Gold derivative which is priced & settled in Bitcoin
Ever since the digital assets have gone mainstream in the trading world, there has been this comparison between the traditional financial assets & the emerging class of digital assets. There is a never-ending debate between the similarities and differences between the precious metal of Gold & Bitcoin — where the former has historically served the purpose of a hedge against risk in the traditional financial markets due to its precious nature & limited supply, while the latter is considered as the store of value for the digital age & also referred to as ‘digital gold’ by its proponents.
It has been a mixed year for the general Cryptos, Bitcoin in particular. While the premier digital coin led the recovery from the longest bear market for the digital assets earlier in April before exhaustion set in Summer as the digital assets turned lower. Nevertheless, it is still up 80% from the level seen before the bull run began in April.
While Bitcoin suffered from a lack of direction in 2019 after turning down lately, the precious yellow metal has behaved as it was expected. With the fears of recession looming on the global economy, Gold has had an impressive run this year gaining more than 20% since the beginning of 2019. Investors seem to be taking cover under the traditional hedge.
“Conflicting narratives abound, fuelling market activity, and we expect demand to only grow for ways to gain and manage exposure to deflationary assets such as gold and bitcoin”
~ Max Boonen, Founder & CEO of B2C2
Although Bitcoin is still a long way off the lows seen at the beginning of 2019, more than 45% drop from the high of mid-summer has thrown cold water on the rally. Then again, this can quickly reverse with the extreme volatility we see in Cryptos.
Anyways, before I get any further away from the topic, an over-the-counter (OTC) trading firm based in London, launched an innovative trading product last month — a gold derivative which allows its users to trade the precious metal against Bitcoin. Clients can trade an ounce of gold priced and settled in bitcoin.
Claiming to be the First of its kind, B2C2 will allow institutional investors to use its OTC trading platform to synthetically trade gold. For those of you who don’t know synthetic trading allows traders to take a long or short position without buying or selling the underlying asset.
Their licensed nature of B2C2’s platform by the U.K.’s Financial Conduct Authority (FCA) provides them with the regulatory approval & credibility. The company states the trading product is a result of demand from its clients coupled with current economic conditions.
The settling of the derivative product is not just restricted to Bitcoin. The platform gives users the liberty to settle their trades in digital assets of their choice, including the recently launched PAX Gold — a gold-pegged token by Paxos, which is the third-largest stable coin by traded volume. B2C2 plans to launch more products as the digital assets market evolves.