Crypterium CEO Vladimir Gorbunov on how to reduce risks in the current unstable market situation
The opinions of experts may not coincide with the position of the editors. “RBC-Crypto” does not give investment advice, the material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.
In mid-February, it is better to refrain from buying bitcoin. The geopolitical conflict and expectations of raising the key rate in the US have led to an imbalance in both the stock and cryptocurrency markets.
Now a set of long positions can be considered at a price of bitcoin no more than $30,000. The current technical support level is located at this price value. There is also a more pessimistic scenario: an impulsive decline in the price of bitcoin to $20,000, where another important target technical support level is located.
For cryptocurrency holders on the horizon of 1-3 months, it is worth considering the option of reducing the risk of a further fall in the value of bitcoin. It is most reasonable to insure through the purchase of put options on bitcoin or Ethereum.
The amount of funds is divided into 2 parts:
For the first part of the funds, place limit orders to buy at a price of $28.9 thousand or sell 30-day put options with a strike price of $29-30 thousand. The sold put option will allow you to receive additional income while bitcoin is trading above the strike price, and if the price of the main cryptocurrency falls below $29,000, BTC will be credited to the balance at the strike price.
For the second part of the funds, place limit orders to buy at a price of $20.5 thousand or sell 30-day put options with a strike of $20-21 thousand. Similarly to the first part, if BTC drops below the strike price, the cryptocurrency will be credited to the balance at a price of $20 thousand.
The purchase of an option includes an expense for the option premium, which is completely burned out by the time the option is exercised. The higher the market volatility, the higher the premium.
A service that allows you to buy insurance against a fall in the BTC and ETH rates can be an excellent solution for cryptocurrency users.
Cryptocurrency insurance is an option to deal with price risk when buying cryptocurrencies. The user indicates the desired amount and selects the appropriate period (i.e. the duration of the insurance) and the cost of insurance. If the price of the cryptocurrency is less than the insurance price on the expiration date, the insurance will cover the price difference for the amount of the purchase.
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