The Algorithm that Helps to Protect Investors From a Volatile Bitcoin

bitcoin volatility
The Algorithm that Helps Protect Investors From a Volatile Bitcoin

A trailblazing actively managed cryptocurrency solution is underscoring its effectiveness by “going short on plummeting Bitcoin.”

This is the message from the chief executive of one of the world’s largest independent financial advisory organisations as the biggest digital currency tumbled as much as 12 per cent on Wednesday.

deVere Digital Asset Funds, a suite of digital currency solutions for experienced investors, launched in association with Dalma Capital Management Limited, took short positions on Bitcoin at $6,300 and Ethereum at $205 before the price plummeted below $5,600 and $180, respectively, for the first time in 2018.

Nigel Green, deVere Group’s founder and CEO, observes: “The sudden drop in the value of Bitcoin will have caught many investors off guard – even though history teaches us that this is likely to be temporary, with prices rebounding again fairly quickly.

“However, those invested in our actively managed cryptocurrency proposition, which uses a pioneering algorithmic system, will have been shielded against this turbulence, and have actually generated profit from the short signals generated by the system, thereby proving its effectiveness and inherent value to those who seek the upsides of exposure to the digital assets sector but with reduced volatility.”

Speaking earlier this month at the launch of the deVere Digital Asset solution, which is to be showcased at the Alternative Investment Management (AIM) Summit taking place in Dubai on 26-27 November at the Ritz Carlton hotel, Mr Green explained how it works for the benefit of investors.

bitcoin chart
Bitcoin price on the last year. Source: Coinbase

“When the price of one asset, for instance Bitcoin or Ethereum, is greater on one platform than on another, the opportunity is identified to generate profit from the difference of price across platforms. These trades, referred to as arbitrage, allow profits to be generated with little or no directional market risk,” he noted.

Zachary Cefaratti, CEO of Dalma Capital comments: “Crypto Asset Markets abound with durable inefficiencies – creating opportunities for hedge funds to generate uncorrelated excess returns through systematic relative value arbitrage, momentum trading and mean-reversion strategies.”

And in the same line that other cryptocurrency experts, he adds: “Crypto Markets have created opportunities that we have not seen in conventional markets for decades. Arbitrage opportunities abound – the prices of the top 25 crypto assets vary across over 400 liquidity venues. The ability to trade long and short allows profit opportunities regardless of market direction.”

The deVere CEO concludes: “Cryptocurrencies are now being widely accepted as the future of money.  They are the bedrock of the digital global economy and, as such, I am confident the sector will increase 5,000 per cent in the next decade.

“However, as this current Bitcoin sell-off demonstrates, the market remains volatile, but the use of ground-breaking technology can reduce investor exposure to the turbulence.”