1. Too complicated：Whether bitcoin futures or margin trading, investors need to calculate the margins in real-time to prevent from being forced into liquidation.
2. Liquidation: As the crypto markets always fluctuate, the orders always face the possibility of being forced into liquidation unexpectedly.
Cryptocurrency ETF, the solution to the troubles above, provides leveraged Bitcoin and Ethereum trading products, which are much more convenient to investors.
6 Types of BTC ETF:
1. BTC3X(Bitcoin 3X Leveraged ETF): Its direction will remain the same as bitcoin, but its daily change will be 3 times to bitcoin. For example, when the bitcoin price rises by 5%, BTC3X is expected to rise by about 15%.
2. BTC3R(Bitcoin 3X Leveraged Inverse ETF): Its direction will perform the opposite direction of bitcoin, but its daily change will be 3 times to bitcoin. For example, when the bitcoin price drops by 5%, BTC3R is expected to rise by about 15%.
3. ETH3X means Open Long 3X ETH: When the ETH price rises 5%, the ETH3X is expected to rise by about 15%.
4. ETH3R means Open Short 3X ETH: When the ETH price drops 5%, the ETH3R is expected to rise by 15%.
To investors, those 6 products above are similar to the spot trading. Investors are able to buy ETF with USDT or sell it for USDT without limits:
1. Simple and Easy: Buying or Selling ETF is totally the same as the spot trading. Investors can earn profits by “Buy LOW and Sell HIGH”.
2. No Liquidation: Being forced into liquidation will never happen again.
Net Value Index: BitOffer will publish indexes of BTC3X, BTC3R,ETH3X, ETH3R, LINK3X, LINK3R, as the net value and the price of the respective ETF. The price and the net value index may not remain exactly the same, but our purchase & redemption mechanism will prevent the price from being too far away from the net value index.
Purchase & Redemption Mechanism:
2. Purchase: The minimum requirement is 10 USDT.
3. Redemption: The minimum requirement is 10 USDT.
FAQ:
1. How should I buy Cryptocurrency ETF as a newbie?
For example：
BTC3R will be listed at 2019.12.16, after then, you can directly go to the ETF market on the spot trading and choose “BTC3R/USDT”. Then you can buy BTC3R ETF with USDT at the market price.
Before BTC3R listed, you can purchase BTC3R without fees and limits on the BTC ETF purchase page.
After BTC3R listed, if you want to buy a huge amount of BTC3R or you consider that the BTC3R price in the ETF trading market is much more expensive than its net value, you can purchase BTC3R at the price based on the net value on BTC ETF purchase page. The purchase will be charged 0.2% as purchase fees.
2. Why does ETF have the function of purchase & redemption?
For example, the profits of BTC3X should be 3 times to trading bitcoin on the spot trading market. We expect investors to be able to earn 3X profit through “Buy LOW and Sell HIGH” ETF. But in the market, the trading price may be far away from the net value due to some human interventions such as hype behaviors. Thus, with the purchase & redemption mechanism, BitOffer ETF will protect the fairness of the ETF price.
If investors find out that the trading price is much higher than the net value, they could directly purchase on the purchase page (and sell it on the spot trading market to earn the price spread as profit); If investors find out that the trading price is much lower than the net value, they could buy ETF on the spot trading market ( and redeem it on the redemption page to earn the price spread as profit). With this mechanism, the fairness of the ETF price will be ensured to remain in the same section with the net value.
After ETF listed, purchase and redemption will charge 0.2% as the fees. Moreover, only the orders which are more than 500 USDT can apply to the purchase and redemption. If the amount of your order is less than 500 USDT, please stay tuned with the trading price.
3. As ETF is leveraged trading, why is it never forced into liquidation? For example, when the bitcoin price drops by 50%, BTC3R should be forced into liquidation due to its leverage?
ETF is providing an underlying for investors to trade easier without concerning about the margins management. In detail, ETF has an automatic position adjustment mechanism: For example, the initial net value is $100, 3 times leverage means the ETF holds $300 as the position to open Long BTC. When the bitcoin price rises by 10%, the net value rises to $130, which leads to that the original position is less than 3 times, the mechanism would automatically add $90 to keep the leverage at 3 times. Similarly, when the bitcoin price drops, the mechanism will automatically reduce the position to keep the leverage at 3 times as the net value decreases. ETF will never be forced into liquidation under this mechanism as long as the bitcoin still owns value.
4. I am experienced in futures trading, Is the return of BTC3X same as 3x futures trading?
In the short term, or when the change is small, their return will remain the same unless the situation in the long term. For example, when the bitcoin price rises by 300%, the return of futures trading is 900%. But due to the automatic position adjustment mechanism affected on ETF, the return of BTC3X could reach 1700%. Another example, when the bitcoin price drops by 50%, the futures contracts of Open Long 3X BTC are already forced into liquidation, but BTC3X still owns value and be waiting for the next trend to rise.