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Introduction:
The Bitcoin Volatility Premium AMC, an innovative investment product, has quickly become the largest actively managed bitcoin-only financial product in Europe and the second largest globally. Despite this achievement, to date this bitcoin-only AMC has flown under the radar and has received no media coverage to date until now. What makes this investment product offering particularly interesting is its dramatic rise was due to the seed investment of $50 million to launch from an enigmatic early Bitcoin miner from 2010. The product is designed to curb Bitcoin's volatile pricing, fostering its adoption as a reliable medium of exchange.
What is an AMC?
AMC stands for Actively Managed Certificate. It is a type of structured security that is popular in Europe. Jurisdictions such as Luxembourg and Jersey allow asset managers to create these certificates in order to raise capital from investors. Certificates provide a "wrapper" for an investment strategy, or specific underlying assets. The certificate is sold to investors, and the capital is used to implement the strategy.
Who is the Mysterious Whale?
In response to inquiries about the identity of the Bitcoin Whale behind the new Bitcoin Volatility Premium AMC, Zeltner & Co. confirmed that the seed investor is indeed an early Bitcoin miner who has been involved in Bitcoin since 2010. However, respecting the investor's request to preserve privacy and avoid public scrutiny, Zeltner & Co. declined to reveal any further details about their identity. The motives behind such a significant move by an individual with substantial Bitcoin holdings are particularly intriguing. The creation of this AMC, aimed at stabilizing Bitcoin's price, showcases a strategic approach to managing digital assets. By personally allocating their holdings to develop this investment product, the Bitcoin Whale not only addresses the issue of Bitcoin’s volatility but also enhances its viability as a stable medium of exchange. This AMC stands out as a unique market-making instrument that not only seeks to manage risk but also differentiates itself through its operational approach, targeting a more stable and predictable market for Bitcoin.
Why is this AMC Relevant?
The Bitcoin Volatility Premium AMC has already become the largest actively managed bitcoin-only financial product in Europe and the second largest globally after the Purpose Investments Bitcoin Yield ETF (BTCY), with over $109 million CAD ($80.750 U.S.). There are several large Bitcoin ETFs that actively manage futures positions, such as the ProShares Bitcoin Strategy ETF (BITO), with over $2.82 billion in assets under management; however, these are not actively managed funds in the traditional sense. Instead of trying to outperform or optimize the risk/return of a direct investment in bitcoin, futures ETFs aim to track the price of bitcoin 1:1.
The difference between an ETF and an AMC is that ETFs are passively managed. That means that they track the underlying asset. Whereas AMCs are actively managed, which means they try to outperform the underlying assets on either an absolute return or a risk-adjusted return.
How is its Investment Strategy Unique?
The certificate invests algorithmically in bitcoin and U.S. dollars, aiming to collect a volatility premium while optimizing the risk-return profile directly by investing in bitcoin. The strategy provides liquidity to the BTC/USD spot market with market making on leading exchanges such as Kraken. This leads to small gains, which can accumulate between 2% and 6% per annum, depending on volatility. The volatility premium is generated when the market moves from filling the buy orders generated by the algorithm to filling the sell orders, and vice versa. The algorithm buys low and sells high at each dip or peak, respectively.
Market Impact and Future Prospects:
The goal of the Bitcoin Volatility Premium AMC is to mitigate the price fluctuations of Bitcoin, making it more stable and functional as a medium of exchange.
Dr. Demelza Hays, a portfolio manager at Zeltner & Co., shared insights with Bitcoin Magazine Pro:
"Bitcoin's potential to become a global medium of exchange and money hinges significantly on achieving stable purchasing power. Currently, the volatility inherent in Bitcoin's price poses a barrier to its widespread adoption for everyday transactions. However, if Bitcoin were to stabilize in value, it could emerge as a viable alternative to traditional fiat currencies, offering benefits such as decentralization, security, and lower transaction costs on Bitcoin scaling solutions such as Liquid, AQUA, and the Lightning Network."
By becoming the largest actively managed bitcoin-only financial product in Europe and a major player globally, the AMC leverages an algorithmic strategy to invest in Bitcoin and U.S. dollars. This strategy aims to profit from market volatility, which in turn influences Bitcoin's demand and price dynamics.
Swiss Family Office Involvement:
The strategy is managed by the prestigious family office Zeltner & Co., based in Zurich, Switzerland. Founded by Thomas Zeltner, Zeltner & Co. is continuing the legacy of Thomas’s father, the late former president of UBS' wealth management, Jürg Zeltner. Zeltner & Co., renowned for its discretion and expertise in wealth management, has lent credibility to this venture, solidifying confidence in the strategy's legitimacy and potential for success.
Regulatory and Geographic Advantage:
Choosing Zurich, Switzerland for its headquarters, the AMC benefits from the region's favorable regulatory environment and its reputation as a global finance and innovation hub. This strategic location enhances the security and appeal of the Bitcoin Volatility Premium AMC to investors seeking to diversify into digital assets.
Conclusion:
The launch of the Bitcoin Volatility Premium AMC comes at a time of heightened interest, with bitcoin recently surpassing all-time highs and capturing the attention of institutional investors and mainstream media alike. As the market continues to mature and attract greater institutional participation, the emergence of innovative investment vehicles such as this certificate highlights the evolving nature of digital asset management.
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How To
Investing In Gold vs. Investing In Stocks
It might seem risky to invest in gold as an investment vehicle these days. The reason behind this is that many people believe that gold is no longer profitable to invest in. This belief is due to the fact that many people see gold prices dropping because of the global economy. They fear that investing in gold will result in a loss of money. There are many benefits to investing in gold. Below we'll look at some of them.
Gold is the oldest known form of currency. It has been used for thousands of years. It was used by many people around the globe as a currency store. It is still used as a payment method by South Africa and other countries.
The first point to consider when deciding whether or not you should invest in gold is what price you want to pay per gram. The first thing you should do when considering buying gold bullion is to decide how much you will spend per gram. You can always ask a local jeweler what the current market rate is if you don't have it.
It's worth noting, however, that while gold prices have fallen recently the cost of producing gold is on the rise. So while the price of gold has declined, production costs haven't changed.
The amount of gold that you are planning to purchase is another important consideration when deciding whether or not gold should be bought. If you intend to only purchase enough gold to cover your wedding rings it may be a smart decision to not buy any gold. If you plan to do so as long-term investments, it is worth looking into. You can profit if you sell your gold at a higher price than you bought it.
We hope that this article has helped you gain a better understanding and appreciation for gold as an investment option. We strongly recommend that you research all available options before making any decisions. Only then can you make informed decisions.
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By: Mark Mason
Title: Mysterious 2010 Bitcoin Whale Launches Bitcoin-Only Market-Making Certificate
Sourced From: bitcoinmagazine.com/markets/mysterious-2010-bitcoin-whale-launches-bitcoin-only-market-making-certificate
Published Date: Mon, 29 Apr 2024 14:02:16 GMT
