Can BTC be paid in installments? Matrixport launches the Installment Purchase program, bringing new gameplay to crypto d

In early November, Matrixport announced the worlds first structured product Installment Purchase, which attracted more than 5 million US dollars in one week after its launch and was well received by the market and investors. According to official information, through the Installment Purchase product, investors can use small amounts of funds to purchase and lock in all future returns of the investment target (BTC or ETH). Investors can enjoy the leverage effect without adding margin . They only need to decide whether to pay the balance in exchange for the investment target based on the actual price of the target after maturity.

In this regard, we can derive the following keywords for installment purchase: enjoy the leverage effect, no need to add margin, determine whether to exercise after the product expires . In terms of not having to add margin alone, it has solved the pain points of countless investors. Coinglass data shows that on November 14, the total contract holdings of the entire network were approximately US$99.45 billion, with a 24-hour liquidation of 831 million, a double liquidation of long and short positions, a liquidation of 497 million long positions, and a liquidation of 334 million short positions (real-time data at 10:40 on November 14). Under the Trump market, the volatility of the 加密货币 market has further increased. So is installment purchase relying on the fact that there is no need to worry about the risk of liquidation before the product expires and no need to add margin to firmly grasp the hearts of investors? In fact, this is only part of the advantage.

In order to provide investors with first-hand investment information, we have deeply experienced Matrixport s Installment Purchase product, and conducted a comprehensive analysis of the financial derivative prototype of the Installment Purchase product, the product principle of Installment Purchase, product advantages and potential risks , so that you can quickly understand the hottest encrypted structured wealth management product Installment Purchase.

1. Warrants, the prototype of traditional financial derivatives installment purchase is popular among traditional investors

Warrants have a history of more than 100 years and are the basic product of financial derivatives.

In 1911, American Light Power first issued and used warrants. Warrants have a history of more than 100 years. The essence of a warrant is an option purchase and sale contract . The party who pays the premium to purchase the warrant has the right (but not the obligation) to buy (or sell) a pre-agreed amount of the underlying asset at a pre-agreed price within a certain period in the future or when it expires. The underlying asset can be local stocks, foreign stocks, basket securities, index shares, bonds, currencies, commodities, etc.

The essence of a warrant is the purchase and sale of an option. Due to its advantages such as convenient financing, risk hedging, and high leverage, warrants have been widely accepted by the market and developed rapidly in the past 40 years. Statistics show that by the end of 2000, 42 of the 55 member exchanges of the International Stock 交换 Federation (FIBV) had launched warrants.

Instalment warrants are the most popular type of warrant on the ASX and are used by Australian superannuation funds.

The Australian warrant market, established in 1991, has become one of the most popular warrant markets in recent years. In the initial stage, Australia only had stock subscription warrants, and later the varieties gradually became richer, such as installment warrants, structured warrants, 贸易 warrants, knock-out warrants, commodity warrants, etc. Installment warrants are the most popular type of warrants on the Australian Stock Exchange (ASX) and are also one of the few leveraged investment tools available to Australian pension funds.

Installment warrants allow investors to pay a down payment of a certain percentage of the value of the underlying assets to obtain exposure equivalent to the underlying securities, and give investors the right to choose to pay (or not pay) the balance at an agreed date in the future.

2. Detailed explanation of Matrixports global first encrypted structured product – installment purchase

The basic principle of installment purchase product

Installment Purchase combines crypto assets with the traditional financial investment tool Installment Warrant. Investors can use installment payments to lock in the potential returns of crypto assets in advance, and the settlement method after maturity is flexible. Investors can choose to pay the balance to obtain the complete investment target share, or not pay the balance and directly settle the cash value, or directly extend the term according to the current cash value.

We can roughly understand the installment purchase product as an upgraded version of installment purchase of a house . Investors pay a down payment to lock in the future income of the property. When it is time to pay the balance, if the house price continues to rise, investors can choose to pay the balance to obtain the property, or not pay the balance and directly earnings settlement (cash value). If the house price falls after the expiration, the user can choose not to pay the balance and exit after settling the cash value, or choose not to pay the balance and not exit, but choose a new property from the builder and use the cash value as a new down payment to lock in the future income of the new property.

For example, an investor uses USDT worth 0.2 BTC to pay the down payment and lock up 1 BTC. After maturity, he can choose to pay the balance to obtain 1 BTC, or choose not to pay the balance and settle the cash value or extend the term.

Actual cases to demonstrate the benefits of installment purchases

For intuitive demonstration, we will demonstrate with an example: Assuming that the BTC price is $82,016.40 at 19:45 on November 11, if an investor purchases a BTC installment purchase product that expires in 15 days, the down payment is $13,643.86 and the balance is $70,000.

Assume that the BTC settlement price is $95,000 after the product expires on 15 days.

Scenario 1: Pay the balance of $70,000 and receive 1 BTC (assuming the investor sells the BTC immediately after receiving it)

The actual profit of the investor in 3.8 days = 95,000-70,000-13,643.86 = 11,356.14 $

3.8 days’ return = 11,356.14/13,643.86* 100% = 83.2%

APY = 3.8 days’ yield / 3.8* 365 = 83.2% / 3.8* 365 = 7991.578%

Scenario 2: No final payment is made and cash value is settled (assuming the investor sells BTC immediately after receiving it)

Cash value available = (95,000-70,000)/95,000*1 = 0.2631 BTC

The actual profit of the investor in 3.8 days = 95,000* 0.2631-13,643.86 = 11,350.64 $

Since the final payment has not been made, we compare the spot and installment purchase products:

Assume that an investor purchases the same spot BTC with a down payment amount ($13,643.86) when the BTC price is $82,016.40 at 19:45 on November 11:

The amount of spot BTC obtained by the investor = 13,643.86/82,016.40 = 0.16735 BTC

When the BTC price is $95,000, the value of the corresponding BTC = 95,000* 0.16735 = $15,898.25

Investors invest in BTC spot to get profit = 15898.25-1,3643.86 = 2,254.39 $

In the same context as above, the return on installment purchases using the same amount is (11,356.14-2,254.39)/2,254.39 = 4.0373 times higher than the return on spot BTC.

Scenario 3: No balance payment, cash value extension

Investors can choose to use the settled cash value as the down payment for the next installment purchase product and enter the next round of investment.

In the current context, the cash value obtained = (95,000-70,000)/95,000* 1 = 0.2631 BTC is used as a down payment to start the next round of installment purchase products.

Installment Purchase is equivalent to providing investors with a low-risk leveraged product . The reason for the leverage effect is that the cost of installment payment is lower than the cost of purchasing a full share. Generally, the higher the final payment, the higher the leverage ratio. The Installment Purchase product currently provides investment target purchases with a maximum leverage of nearly 10 times , and users do not need to add margin after purchase.

At the same time, the installment purchase feature of installment payment and diversified delivery and settlement allows investors to achieve the same asset allocation goals with less funds, and the money saved can be used to invest in other investment targets, thereby improving the overall capital utilization rate of asset allocation, achieving the goal of diversified investment, risk diversification, and maximizing returns.

Reasonably understand the possible risks of installment purchase products

Continuing with the above “Installment Purchase” product example, assume that the BTC settlement price is $80,000 after the product expires on 15 days.

Under the premise of BTC price falling, assuming that investors do not pay the balance, the cash value settlement is made directly

Cash value available = (80,000-70,000)/85,000*1 = 0.125 BTC

Investor asset loss = 13,643.86 – 80,000*0.125 = 3,463.86 USDT

To sum up, we can summarize the potential risks of installment purchase products into the following two points:

Risk of currency price fluctuations: The risk of currency price fluctuations faced by using installment purchase products to purchase investment targets (such as BTC or ETH) is the same as purchasing spot products. It is affected by market liquidity, FOMO sentiment and macro factors. If the currency price goes down, users may bear the risk of asset loss. Investors can reasonably configure bearish tools to hedge risks.

Leverage risk: Installment purchase is equivalent to providing investors with a low-risk leverage product. When investors expectations of the underlying assets are correct, they will gain leverage gains; if not, they will also suffer leverage losses. However, leverage losses are limited, and losses are limited to the down payment.

3. Matrixport launches the world’s first “installment purchase” product, bringing new gameplay to crypto financial derivatives

As a long-established one-stop crypto financial service platform, crypto asset management products have always been Matrixports strength, especially in the structured product track. Matrixport once led the launch of the dual currency product in 2019, triggering a wave of structured financial management. Five years later, the launch of installment purchase brought Matrixport back to the market spotlight. As a basic product in traditional derivative financial instruments, the introduction of warrants into the crypto world is not only conducive to enriching the current ecology of crypto financial derivatives, but also conducive to the integrated development of crypto finance and traditional finance.

At present, Matrixports structured products are in full bloom, including dual currency, snowball, shark fin, trend profit, seagull, installment purchase, etc. The products cover people from low-risk preference investors to aggressive investors. At present, Matrixports fund management and custody volume has reached 6 billion US dollars.

A practitioner from the Matrixport asset management team revealed to reporters that some of Matrixports new structured products have entered the product development stage. We are looking forward to what kind of structured products Matrixport will launch next, and we also hope that Matrixport can continue to be the leader in the crypto asset management track and help investors capture rational returns.

This article is sourced from the internet: Can BTC be paid in installments? Matrixport launches the Installment Purchase program, bringing new gameplay to crypto derivatives

Related: Matrixport Research: No extreme positions are seen in the options market, and traders are cautious about the future tren

Trump leads in election data, but options market does not show extreme positions The latest data from Ploymarket shows that Trump leads Harris by more than 10 points, with Trump at 55.9% and Harris at 43.4%. As implied volatility continues to be low, BTC traders need to establish corresponding positions to prepare for the bull market that may be brought about by Trumps victory. However, data shows that although BTC options will expire on November 8, 2024, there is no extreme position in the market, indicating that traders remain cautious about the election results. It is not ruled out that although Trumps election is good for the crypto market, Trumps monetary policy may put pressure on the long-term trend of crypto assets. MicroStrategy continues to be popular, and investors prefer…