Trader, go through derivatives or invest in start-up are all possible to bet on cryptocurrency.
For some, bitcoin does not have the makings of an investment . This is not the opinion of everyone. On the contrary, users of the Coinbase trading platform are even more likely to use the famous virtual currency only as an investment, or as a long-term store of value, rather than as a transfer tool. In 2015, this was the case for 64% of them against 46% in 2012, reveals the platform in a recent study .
“The high volatility of bitcoin is a risk but also an opportunity”
A good idea according to Jean-Christophe Laruelle, co-founder of Crypto Facilities, a company that provides risk management and trading solutions in digital assets. For this former BNP Paribas and Societe Generale, the cryptocurrency will “endure and grow in value.It is a long-term belief.The demand is growing steadily.In addition, bitcoins are destroyed – if you lose your private key you can not use them anymore, so the number of bitcoins on the market, limited to 21 million, can only decrease. ”
Same story at Gonzague Grandval, co-founder of the Paymium trading platform, but not for the same reasons. “Some speculators see the future technological developments that are the segregated witness (segwit), a principle that will increase the capacity of blocks of transactions on the blockchain in the short term, and the lightning network, an overlay to the bitcoin network that will allow millions of transactions per second to be used as positive signs for bitcoin’s upward evolution.These new protocols lead them to believe that we are on a value that is being born and built and likely to appreciate, “he says.
The investors who do not like to wait can in turn try to take advantage of the volatility of Bitcoin. At their own risk, recalls Jonathan Horlacher, an analyst at Credit Suisse. “The value of bitcoin can go up or down from $ 300 to $ 400. Considering bitcoin as an investment is taking a risk multiplied by 10. If you really want to speculate, it’s better to do it on something better known and more liquid, “he asserts. This high volatility “is a risk, admits Jean-Christophe Laruelle, but it is also an opportunity.” Gonzague Grandval abounds: “To make money with bitcoin, there are not 50 solutions, you have to buy bitcoins and resell them more expensive.
If there is no miracle recipe, the co-founder of Paymium already advises to be interested in events that can affect prices. This is the case with halving, the halving of the mining reward that took place in July 2016. “The monetary creation of bitcoins having been halved, it is likely that the price of bitcoin will increase. do not know if this increase has already been anticipated – the price has increased from 200 to 600 euros in recent months – or if it will have an effect in the coming weeks or months, “says the leader.
But not everyone has a place on trading platforms, according to Louis de Froissard, associate manager at Montaigne Patrimoine: “When you have a dynamic profile, it is not absurd to test a recognized platform in France Like Bitcoin, Bitcoin has a safe haven side, and since we’re not immune to big shocks in the financial world, it may not be a bad idea to hold some. ” The counselor remains measured: “For gold, it is said that one should not exceed 5% of its assets to the bitcoin I would say do not go beyond 1%. “.
“” When you have a dynamic profile, it’s not absurd to test a recognized platform in France “
Louis de Froissard does not see, however, the interest of subscribing to an offer such as that launched by the company of Jean-Christophe Laruelle: a future on bitcoin, that is to say a contract that requires to take a position to buy or sell futures. “Derivatives are good for hedging a portfolio but not for speculating because the derivative is the price of the underlying, not the other way around. there was a huge amount of money on the underlying and when all the derivatives came out, the price of gold became excessively low.In all commodities , the volumes of the derivatives influence the prices enormously “, assures Louis de Froissard.
In addition to hedging, futures, which are also widely used in currencies and equitymarkets , offer the possibility of leveraging. “If you have 1 bitcoin, with our platform, you can position yourself for the purchase on the equivalent of 6 bitcoins or 50, depending on the type of products you use,” says the co-founder of Crypto Facilities, which has already attracted institutional investors as well as retail clients who “are trading and already have a certain level of trading”.
“For gold, we say that we should not exceed 5% of its assets.For bitcoin, I would say that we should not go beyond 1%”.
Cédric Jeanson, CEO of BitSpread welcomes the arrival of derivatives on this underlying: “The more instruments there are around bitcoin, the more interesting it will be for us”. It is that the fintech that he directs, based in London, develops strategies around the virtual currency. “The ratio of Sharpe (measure of profitability according to risk, Ed) of some of them is 8. In hedge funds, when it is 1 or 2, they are already happy,” launches former JP Morgan and BNP Paribas. One of these strategies, the so-called liquidity strategy, consists in buying and selling bitcoin on a multitude of stock exchanges.. “With our algorithms, we can find a fairly important profitability,” says Cédric Jeanson.
But to hope to enjoy it, we will have to wait. The manager is still working with the FCA, the English regulator, to allow its customers, through the blockchain , to invest in these strategies. “It will probably be possible in September 2016,” says the entrepreneur who says that many people have already expressed interest. “Family offices and wealthy people,” says Cédric Jeanson, “these are exclusive investments that are reserved for people who will understand what is being talked about, it is an offer that is close to wealth management.”
Another possibility to get rich with bitcoin, but that assumes to be a savvy investor, is to arbitrate: “Many people are studying the price differences between the two Kraken and Coinbase trading platforms. one and sell on the other.There is also a potential arbitrage between bitcoin / euro and bitcoin / dollar, “says Jean-Christophe Laruelle of Crypto Facilities.
“Put some marbles into funds that accompany this type of business can be a good idea”
Last option which, again, implies a high risk, invest in a start-up whose economy is linked to bitcoin. “It’s a way to put a ticket on the very risky part of the portfolio.” Overall I believe in this sector, “says the wealth management consultant Louis de Froissard, who was nevertheless scalded by the attack that has The DAO, a sort of investment fundlaunched on the Ethereum blockchain, was the victim of a loss of $ 50 million from the Ethereum users. “It’s a sector that is going to give something – putting a few balls in the funds that come with this type of business can be a good idea.”
Only here, the offers are not legion. The Newfund venture capital fund has invested well in Paymium, but Newfund’s Thomas Bertier warns at the outset: “The entrance fee is quite high, it is not accessible to retail customers and we have not not the desire to open ourselves to a large number of subscribers “. In short, the time of the device ISF- Bitcoin associated with a venture capital company has not yet come.
On the other hand, that of trackers launched on a bitcoin index approaches. “We have just set up a partnership with the Chicago Mercantile Exchange, says Jean-Christophe Laruelle of Crypto Facilities, with which we develop an index that will be the equivalent of the CAC 40 for bitcoin taking into account the flows that come from different spot markets.It will be officially launched with the Chicago market, which is the largest derivatives market, in the last quarter of 2016. Thereafter there will be trackers launched by banks on this index. ” Case to follow.