Nexo says you can earn 8% on a Fixed Term bitcoin savings accounts. Would it make sense to invest in such an account and hedge the price risk of bitcoin by shorting CME bitcoin futures or BITO? The main risk appears to be Nexo becoming insolvent -- I don't know how to estimate the probability of that. Bitcoin futures are currently in slight contango, so hedging by shorting them does not incur negative carry.
Hedge high-interest bitcoin savings account with short bitcoin futures?
- Thread starter ajensen
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How do you think they finance this? They pay you 8% and receive 0% for their interest bearing holdings.
8% per year in exchange for assuming the risk of total loss against an entirely opaque unregulated counterparty seems like a bad trade.
Not opaque, all crypto assets are verifiable on the blockchain
All of these companies are highly regulated in the financial markets they operate in
BlockFi, Nexo, Celsius Network, Ledn, Fidelity, and Gemini
It comes down to this. There is no free lunch, nor free money. If you are being "paid" 8% a year, you can be damn sure you are giving up something in return - whatever that something might be.
The lender makes more than the 8-10% they pay you
Could you explain how? If I understood this I would more comfortable investing such an account.
Sure, they earn yields through securities lending. From what I've read/heard, it's the most profitable and least riskiest business
Lots of companies trying to get into this business. Fidelity announced last year they want to offer it to their high net worth clients, pay them interest for holding their crypto assets
Coinbase wanted to get in the action, but SEC said they will sue them if they release the product
Coinbase was pissed because they were only going to offer 4% APY to start with but everyone else has been offering double that for 2 years, BlockFi, Celsius Network, Nexo, Ledn, Voyager and Gemini their competitor in the US was offering it but did not get sued by the SEC
SEC picked on Coinbase because it was publicly listed company, but I digress
I have a thread on "investigations" going after Celsius Network, Nexo, Voyager and Gemini. BlockFi has been dealing with legal battles with New Jersey
Ask yourself why the regulators and all of these US agencies are going after these companies offering high yields?
It doesn't make sense it's for "consumer protection" when consumers are being f*cked by banks by giving 0.1% on savings. Unless these US agencies are partners with banks on in their pockets? Nah, that couldn't be the reason
These crypto banking deposit/lending companies thrive and make money even when we had a crash and lost $1 Trillion in value in the cryptos market last year and again this past 2 months
There's only 1 company that I know of that went bankrupt in this crypto assets deposit/lending business which is Cred because from what I understand lent to Chinese/Asian traders that were not financially stable
The US victims have to be protected from high yields!!
How dare these people take the banks' money deposited in the banks??
This is why we bitcoin/crypto. The money in the banks is not yours
If you did not have a BlockFi account before, you are now protected from 9.5% APY. Thank the SEC!!
https://www.coindesk.com/policy/202...-settlement-with-sec-state-regulators-report/
How dare these people take the banks' money deposited in the banks??
This is why we bitcoin/crypto. The money in the banks is not yours
If you did not have a BlockFi account before, you are now protected from 9.5% APY. Thank the SEC!!
https://www.coindesk.com/policy/202...-settlement-with-sec-state-regulators-report/