# Wild cryptocurrency leverage Is on offer for pros in 20-times Bitcoin Bet | Tech News (HT Tech)

> Institutional pros have a fresh way to navigate the cryptocurrency boom and bust via a new hedging tool offering 20-times the daily performance of Bitcoin.

# Wild cryptocurrency leverage Is on offer for pros in 20-times Bitcoin Bet

## Institutional pros have a fresh way to navigate the cryptocurrency boom and bust via a new hedging tool offering 20-times the daily performance of Bitcoin.

Aug 21 2022, 23:48 IST

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A product that seeks to deliver 20-times the performance of Bitcoin stands out (AP)

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### By BLOOMBERG

Institutional pros have a fresh way to navigate the cryptocurrency boom and bust via a new hedging tool offering 20-times the daily performance of Bitcoin -- landing in the midst of the global meltdown in digital money. FTX Trading Ltd. listed the certificates in Vienna earlier this month, with the intended users being investment firms that are balancing ballooning exposures to the world’s largest token thanks to client demand for their crypto products.

The securities offer a wild ride for the unhedged. The index tracked by the certificates surged as much as 296% in a day at one point in January. It’s also tumbled 50% in less than 24 hours on several occasions amid the trillion-dollar crypto wipeout.

A product that seeks to deliver 20-times the performance of Bitcoin stands out even in Europe’s exotic market for complex investing structures.

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“A 20x leverage is clearly a stunning world premiere and by far not-common,” said Martin Raab, Zurich-based managing director of the Asset Security Trust and board member of Global Green Xchange, a new ESG marketplace. “Most certificates -- bear and bull -- are equipped with a 3x maximum leverage.”

The certificates offer a way to trade perpetual crypto futures -- a popular contract among digital-token bulls -- without the need to take custody of the underlying asset. The idea is that professional investment firms may struggle to take on direct cryptocurrency exposure for compliance reasons, but they may be able hold a certificate listed on the Vienna Stock Exchange.

Effectively the company’s exposure is the same -- in this case to 20-times the performance of Bitcoin. It just comes in a different wrapper.

Predictably for a 20-times leveraged product, investors have the potential to be wiped out, though losses are capped at the amount invested. Typically, constant leverage certificates also seek to reduce the chance of that happening, with a mechanism that can reset the product in intraday trading if it drops to a certain threshold.

The new vehicle is a response to demand from European investment firms looking to hedge exposure from their own retail investor offerings, a spokesperson for cryptocurrency exchange FTX said by email. The firm plans to offer additional products, although this will be “the highest leverage we will ever use,” the spokesperson said.

FTX account holders can already lever up 20 times, though that’s tame in comparison to the 101 times cap available before it was drastically lowered last July in the name of consumer protection.

The so-called constant leverage certificates track an index and reset daily. That means an investor holding one for more than a day will see their performance deviate from 20-times the Bitcoin move. The minimum needed to invest is $100,000.

“You really need a real-time, highly sophisticated risk engine in place when holding such an ultra leveraged product in your portfolio,” said Raab at the Asset Security Trust. “For the wrong investors, this could quickly turnout like driving a Maserati at 100 mph on the Interstate blindfolded.”

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27 Jan, 00:44 IST

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