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Are Hedge Funds Safe in Unstable Times? Here Are A Few Tips You Can Use

Hedge Funds tend to perform individual stocks as a result of their diversification. There is a bit more you should know as you read on..

Nobody would have accurately predicted that a pandemic would come to change the course of activities all over the world, but smart investors are always prepared for such a time as this. Do you also want to take advantage of this COVID-19 outbreak to invest in hedge funds?

I know you feel unsafe and insecure about investing this period, and it’s perfectly normal to feel that way, mainly because stocks – even of bigger corporations – are generally depreciating, oil prices have reduced, gold is hitting rock bottom, and many more unfortunate economic events are happening.

Notwithstanding, is it safe for you to invest in hedge funds in this unstable period? I am going to share some of the properties of hedge funds with you in the following paragraphs so you can decide if investing in hedge funds is right for you this period.

1. Diversification

Hedge funds offer an array of investments such as long or short, tactical trading, events-driven or emerging markets, and managers take advantage of diversified investments to earn the highest return for the least risk.

Hedge funds focus on specific risks to reduce its risk exposure, by a large percentage, to the general market movements. This technique works because these investments react differently to the same economic event. So, hedge funds generally outperform equities with much lower volatility even in unstable times.

Read Also: What You Need to Know About Samsung Blockchain

2. Long or Short Selling of Hedge Funds

This is a killer strategy that most hedge fund managers use; it involves buying and selling stocks that are undervalued. Managers target shares that are about to hit rock bottom, and they borrow it. Then they make a gross profit by selling out the borrowed shares and buying it back when it falls.

However, there are risks associated with this if the market conditions do not go as planned. It may lead to a situation called a ‘short squeeze.’ Long term selling, on the other hand, involves buying undervalued stocks with the hope that it will appreciate with time, and then sell it when it does.

3. Transparency

Hedge funds are not regulated by the Securities and Exchange Commission, but the Dodd-Frank Wall Street Reform and Consumer Protection Act passed in 2010 requires them to be transparent. The transparency, however, does not include disclosing where investments are made.

4. Loss Reduction

Most hedge funds have highly financially intelligent workers, who do not only employ aggressive investment strategies to maximize returns as well as reduce risks but are also very good in financial management to be factual. They provide investors with the best information there is and also use selective strategies that they believe will add to the bottom-line.

5. Risks and Returns

According to the Securities and Exchange Commissions, hedge funds managers in a bid to maximize returns often engage in many risks. If things do not turn out as planned, it may lead to a bottom-out in returns. Also, the lack of a regulating body makes hedge funds prone to the risk of fraud.

Read Also: How Leverage Trading Works When You Use The Binance Cryptocurrency Exchange

Are Hedge Funds Worth It this Period? Final Words

Hedge funds are low-risk investment vehicles, which are not entirely dependent on the situation of the general economy, mainly because of how it is run. So, it is worth trying; however, losses can be incurred like every other investment vehicle.

Must Read:The Price Volatility of Bitcoin and Cryptocurrencies Explained

What You Need to Know About Samsung Blockchain

Blockchain has gained some grounds in the last two years, and the big tech companies have moved in. Here is what Samsung is up to with its initiative.

Blockchain is a life-changing technology and it’s been making its way into many sectors of the world such as in business, communication, agriculture, supply chain management, health, and lots more. However, did you ever imagine that leading tech companies like Samsung will also implement blockchain in their devices?

The creation of the Samsung blockchain is a huge development, and there are lots of benefits attached to this development. Though the tech gadgets company stated that they built a blockchain because they are in support of decentralized services, there’s so much to learn about the Samsung blockchain. In this article, you’d find brief but concise facts that you need to know about the Samsung blockchain.

Blockchain and Tech Gadget Companies

Many tech giants have been silently developing and announcing their plans for deploying the blockchain technology in their products. Apple, for example, has reportedly claimed to be following cryptocurrency and the blockchain technology as a whole, tipping it as a sector with massive potentials in the future.

Apple has also been building protocols and has even launched the iPhone CryptoKit. Other tech companies like LG has also declared that they have completed their research on the blockchain ecosystem; so, the blockchain tech will soon find a strong footing in the tech gadgets industry.

More About the Samsung Blockchain Ecosystem

Samsung has equipped its flagship smartphones with decentralized applications and blockchain service providers. Although it is still in its early phase and is only compatible with flagship models like Samsung Galaxy S10, Samsung Note 10, Note 10+, and some other variations of the S10-series.

The company’s intent was stated along with the release detailing the fact that they are in full support of a decentralized system, which is secure, transparent, and with proper detailing of transactions among multiple registers of all computers involved in the block.

Samsung launched its pioneer blockchain flagship, the Galaxy Note 10 variant, known as the KatlynPhone, which has the same features as the regular Galaxy Note 10 but with tweaks to include software containing decentralized applications and a cryptocurrency wallet. That much for smartphones.

The testing phase has been underway since early 2019 with significant improvements in the DApps created with the inclusion of new apps for each stage of the test. Though the company claims to have just begun to scratch the surface of the blockchain ecosystem, they have made a huge statement of commitment with the release of their second blockchain phone.

The company’s team has started to create systems to store private keys for Stablecoins, Enjin Coin, Ethereum, Binance Coin, and, more recently, Bitcoin. The company has also been pushing for intricate variations of the blockchain, which will aid the development of cutting-edge technology for storing cryptocurrency and building decentralized applications (DApps).

Samsung has also announced that moving forward, it will expand the range of models that the blockchain technology is compatible with. In the company’s own words, “DApp browser is a tool for developers to set things in motion and for allowing web-based blockchain applications to work on mobile phones.

CONCLUSION

Safe to say that blockchain is the future of tech. With Samsung making inroads in this sector, we are likely to see more innovations show up in the days ahead.

With The World Economy Lying Prostrate, The Forthcoming Bitcoin Halving Could Be Something To Cheer About

Bitcoin halving last happened in 2016, and it led to a 10-fold spike in price. Will it happen again in 2020? Read on to know more..

The Three Likely Outcomes from Bitcoin Halving

Bitcoin halving refers to the process in which the Bitcoin networks’ issuance rate is cut in half, and this happens about every four years or after every release of 210,100 blocks.

Usually, new Bitcoins produced by miners who use expensive electronic equipment to mine them enter into circulation as block rewards. However, after every 210,000 blocks or about four years, the total number of Bitcoin that miners can win is halved – this is referred to as Bitcoin halving.

Since the inception of Bitcoin, there have already been two halvings: the first one was in 2012, and the second one was in 2016.

Following the halving event, the block reward will be reduced from 12.5 to 6.25 BTC (Bitcoin mining started with 50BTC as its mining reward and halved to 25BTC by 2012, and then 12.5BTC by 2016).

During those times, there were apparent implications on the financial market and the digital world of cryptocurrencies. Read on to find out the likely outcomes from the upcoming Bitcoin halving event:

1. Bitcoin Miners Have A Reward Knock

Firstly, the Bitcoin halving event will cost miners by cutting their reward in half, but with the additional loss of the sudden fall in reward burden, damages could be twice as bad for miners.

Miners, not expecting a sudden fall in BTC price, had been accumulating Bitcoin, waiting for the value to rise during the halving.

2. A Decline in Bitcoin Hashrate

The hash rate, which is the operation speed of a cryptocurrency mining machine, is essentially a measure of the miner’s performance.

There is an agreement that the hash rate on the Bitcoin network, which currently stands at 1.54 exahashes per second, will experience a slight decline.

The total network hash rate will decrease by approximately 10% after halving since older equipment that is no longer economically viable will leave the network. Later-generation machines will pick up some of the slack.

The most important thing is that even with a decline in the hash rate, the security of the Bitcoin network will not be compromised.

But after the halving, eventually, some miners will leave, everything will settle down, and the system will grow again – this upcoming halving event will not be the first, and it will go on once every four years until all 21m BTC are mined.

3. The Most Important Effect: The Price Leap

There is a price leap effect expected in May 2020 as a result of Bitcoin Halving. This is comparable to what happened the last time there was a halving in 2016, there was a ten-times leap in price. So, it expected that something of the sort will happen again this year.

The underlying argument is that with the halving of bitcoin reward, less supply of BTC will occur from mining. In keeping with the tenets of Economics, a reduction in supply almost always will lead to a price spike.

Conclusion

In 2020, should we expect more of what happened in 2016? If that is the case, profiteers will likely start taking positions now for the expected windfall.

The Price Volatility of Bitcoin and Cryptocurrencies Explained

Bitcoin is one investment that jolts a lot of people out of their financial amnesia. Why is price volatility a feature of cryptocurrencies? Read more..

4 REASONS FOR THE VOLATILITY OF THE GLOBAL PRICE OF BITCOIN

There is no doubt that Bitcoin is the pioneering cryptocurrency , and it came to human consciousness when it was introduced in 2009 when the legendary Satoshi Nakamoto launched his whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System.” Bitcoin was then floated and lots of successes and as minor setbacks have been recorded so far.

One of the concerns associated with the Bitcoin is its relative volatility, compared to traditional fiat currencies. This concern has further strengthened the stance of many people on Bitcoin as a risky investment and a sham; with both investors and digital currency users growing cynical despite evident massive potential benefits.

Bitcoin’s value has displayed massive volatility historically. For instance, within a three-month period from October 2017 to January 2018, the price volatility of the Bitcoin approached nearly 8%, more than double its volatility in the 30-day period from December 2019 to January 15, 2020. It is thus important to understand the several factors driving Bitcoin’s volatility.

Read Also: How To Invest In 2020

  1. Speculation

As with other investments, news reports determine the buying or selling decisions of most investors. News ranging from statements credited to luminaries in the tech or investment sphere, security breaches and new regulations by regulatory authorities and governments usually trigger responses in the Bitcoin market. This corresponds to the law of demand and supply.

It is therefore important to try not to allow emotions to lead you in making critical investment decisions. It is also important to be abreast with up-to-date market information in order not to make huge losses or miss opportunities to make a good spread.

2.Poor Management Of Exchange Platforms

This has also been seen to generally affect the market value of the Bitcoin. One example is the price instability that occurred around November 2018 when rumours of security issues and poor management plagued Mt. Gox exchange.

Prior to this, Bitcoin had reached an all-time high of around $1200 and dropping by about 39% in about three days. Many users experienced challenges withdrawing their funds at that time, resulting in widespread panic.

Another massive price crash was triggered early in February when Mt. Gox Exchange filed papers for bankruptcy in Japan. The price of Bitcoin was around $911 at the time, but it crashed to $260 in under two weeks as a ripple effect of that move.

Read: Which Cryptocurrencies Should You Invest In 2020?

3.Government Policies

Policies in support (or not) of the Bitcoin also determine the direction of the digital coin’s value.  Validation in form government recognition portends positive things for the crypto space.

Institutional parties understand that this trend is inevitable, pushing them to work on policies intended to gain as much social benefit from digital currencies as possible. This gives comfort to those who hold traditional views on financial systems; making a smoother move to an economy where digital currencies play a more critical role in global trade.

4.Lack Of Consensus In Community Governance

This has also contributed to the instability in the value of the Bitcoin. An example of this influence was observed in 2017 when an increase in block size led to a hard fork that resulted in different blocks with different rules, thereby, birthing Bitcoin cash.

These and other similar periods of uncertainty in the community on the rules of Bitcoin, as well as its future, have mostly had negative consequences on Bitcoin prices.

Conclusion

It is of utmost importance to understand the several price-determining factors allied to Bitcoin in order to take full advantage of the bull and bear periods to maximize profits.

The 3 Trusted Global Cryptocurrency Exchanges For Futures Trading

Futures trading in the cryptocurrency space has expanded in the last 12 months with several platforms now offering this investment window. Here are the leading exchanges making their marks.

Futures trading for Bitcoin, other cryptocurrencies, or financial assets, generally, is a contract to buy or sell a particular financial asset at a fixed price after a period in the future. The goal is to prevent negative changes in the prices of such financial assets in the market.

But as simple as this sounds, knowing the right platform to carry out this kind of trade is essential, mainly because the right platform will help to regulate the contracts that have been made, and help to prevent conflicts from happening in the future.

There are reliable and regulated platforms for futures trading of cryptocurrencies, which should a relief for people who are sceptical about the decentralized and unregulated nature of cryptocurrencies.

Two big regulators overseeing cryptocurrency futures trading in America, and these are Chicago Board Options Exchange, CBOE; and Chicago Mercantile Exchange, CME. However, these two bodies are strictly regulated by American laws and may not directly apply to you.

So, in this article, I will exclude those CBOE and CME and talk about the other three best exchanges that apply more to you irrespective of your current location. The best 3 global exchanges for futures trading include the following:

1. Bitmex Exchange

BitMEX was launched in 2014 and is known for its beautifully designed platform. In addition to being an impressive platform, it also contains many useful tabs. However, it has a difficult user interface in my opinion.

Many cryptocurrency futures are served on the platform. But to start with, Bitcoin Futures are traded in perpetual contracts, which implies that the contracts don’t have an expiry date. Also, the offers have a leverage of about 1:100.

Other crypto future contracts traded on this platform are Cardano (ADA), Bitcoin Cash (BCH), EOS, Ethereum (ETH), Litecoin (LTC), Ripple (XRP) and TRON (TRX).

2. Kraken Exchange

Ethereum, Litecoin, Bitcoin Cash, Ripple, and Bitcoin futures are served on the Kraken exchange. On this platform, futures are incredibly useful with respect to capital and require less money to open positions, unlike spot trading or margin trading which are 1:1 and (3:1 – 5:1) respectively.

Also Read: How Leverage Trading Works When You Use The Binance Cryptocurrency Exchange

In spot or margin trading, you may have to commit between 20-100% of your cryptocurrency, which can make you afraid of a big loss. But this platform offers a leverage of 50:1 and allows you to entrust only 2% of your money to the exchange.

3. Binance Exchange

Binance cryptocurrency exchange announced the official launch of its two platforms for trading cryptocurrency futures that were previously in test mode in September 2019.

Platform A, also called Binance Futures, is already being used by the code owners who have tested and voted for the site as credible and capable, but it’s also available in beta mode for users who have a referral code.

Also Read: Investing in 2020: what you need to know

The platform distributes about 200 codes daily to intending users who participate in Binance social media (Twitter, Weibo, etc) activities or by contacting support.

Platform B is now known as Binance JEX, which will make it possible to do many amazing things in futures trading. For example, it will be possible to transfer funds from the main exchange to Binance JEX.

Other crypto futures that are served on the platform are EOS/USDT and ETH/USDT contracts.

Conclusion

While several platforms are now offering futures trading to their users, these ones above clearly have the integrity and reputation that users around the world can trust.

How Leverage Trading Works When You Use The Binance Cryptocurrency Exchange

Cryptocurrency trading is no longer new in many parts of the world. Leveraging on crypto is , however, just taking a foothold in the global financial markets. Here is a lead on how this works.

Leverage trading (or margin trading, as it is more often known) has hit a new high in the last two years, with companies and groups dedicated to forex selling it as a way to make money with relative ease.

While most people who are into margin trading do it on forex, there’s a booming market for it in cryptocurrencies. This market is easier to enter and less complicated than the forex market, and it effectively works 24/7/365. The crypto market is presently worth more than $320 billion.

How does leverage trading work?

Leverage trading plays out in making short-term, usually low-earning trades using a mixture of your own money (your “leverage”) and money lent to you by the exchange.

Depending on the exchange and your own standing, you can be allowed to trade five, ten, or even a hundred times the amount of money you have as leverage. As the value you’re trading increases so do the profits – thus allowing for potentially paper-thin earnings to become sizeable.

Naturally, leverage trading doesn’t work as an actual loan – that is, you can’t actually lose the money you’re loaned. Instead, you’re allowed to invest using that money as long as your total loss is equal to or lower than your original leverage.

Let’s use an example. Say, you have $1000 and get approved for a 50x leverage, letting you invest up to $50,000. That’s great, right? You use those $50000 to buy Bitcoin, which is sitting at $5,000/token and you expect will go up.

But instead it starts going down. The way leverage systems work, you won’t be able to sit and look at those $50,000 become $40,000 then $30,000 then $20,000 and so on. The way leverage trading works is simple: As soon as you lose your initial investment (which here would be $1000,) you must sell. So the moment your BTC investment hits $49,000, it’s time to go. That way the money you’ve received can be repaid without you ending up in debt.

What role does Binance play here?

While Binance is far from the only crypto exchange offering leverage trading, it is the largest one to do so. The fact that Binance is not only large, but also trustable, makes it the best place for newcomers to margin trading or crypto to enter the market.

How does leverage trading on Binance work?

While Binance has long been criticized for being too lax on identity theft prevention and at times not following the rules established by some of the countries its clients come from, leverage trading on Binance is considerably more regulated than standard operations in the exchange.

In order to open a margin trading account, you must have completed Binance’s identity verification (KYC) process and you can’t be a resident of a certain set of countries. Specifically, residents or nationals from Iran, North Korea, Cuba, Crimea, Canada, Japan, South Korea and the United States and all its territories can’t partake on leverage trading on Binance.

Also Read: Investing in 2020: what you need to know

This scenario above follows both international rulings regarding sanctions against certain countries (Such as Iran, NK, and Cuba) and local rules and regulations regarding margin trading, as is the case with the USA.

Once you have completed KYC requirements, however, getting a leverage trading account on Binance is quite easy: Just go to your account dashboard, select your balance, then click on “margin.”

What do I do once I have an account?

Binance’s leverage trading works using your own funds already in Binance. All you have to do to fund your account is go to your wallet, and once there select the “margin” option, and then “transfer.” You’ll then be asked which currency you want to move to your margin wallet and the amount – the transfer is immediate and incurs no fees whatsoever.

Do note that Binance’s margin trading system doesn’t support fiat currencies. However, it does support stablecoins, such as Binance’s BUSD, whose values are pegged to those of fiat.

Once you have moved the funds to your margin trading account, you can start trading – however, you won’t be getting any leverage off the bat. In order to activate leverage trading, you have to go to your wallet and select the “Borrow/Repay” option. Binance offers a default 5x leverage, so the most you can get is four times what you already have.

Also Read: Which Cryptocurrencies Should You Invest In 2020?

From then on, you’ll have the money in your account to use as you see fit. You can only use the leverage money for margin trading, and you’re expected to always keep enough funds in your account to repay what you owe.

To help you with this, Binance gives you an indicator of how risky your current position is according to your total debt and the collateral you hold in your account. The indicator uses a formula that goes as follows:

Margin Level = Total Asset Value / (Total Borrowed + Total Accrued Interest)

The closer the result of this goes to 1, the riskier your position is. If your value reaches 1.1 or below, Binance will immediately liquidate all your assets to pay your debt. If this happens, you’ll be notified of it immediately – in fact, you’ll receive notifications as your position grows riskier so you can take steps to prevent further losses yourself.

Do I keep all my earnings?

No, you don’t. While you get to keep most of what you make while margin trading (since you’re the one taking the main risk,) Binance charges an interest rate on your borrowed money. This rate varies depending on the currency and changes regularly. For updated rates, you can refer to Binance’s own interest table.

Conclusion

Cryptocurrency trading is rated as highly volatile with the window for gains and losses swinging either way. You can make the most of your crypto gains with a bit more care, adherence to rules, and above all, continuous learning.

Which Cryptocurrencies Should You Invest In 2020?

Cryptocurrencies have altered the landscape of investment in recent years. Should you invest in them in 2020? Read on.

Are you looking for the best way to invest your hard-earned money so that you can get maximum returns from it? Do you want to invest in cryptocurrencies but don’t know which will be the best to invest in this 2020?

Cryptocurrencies took the world by storm in 2017 with a whopping 1500% increase in bitcoin price, and this has led to an increased number of investors. However, because of the price volatility of cryptocurrencies, you need to know the right cryptocurrency to invest in, and that’s why this article is written.

Below are 2 cryptocurrencies to watch out for if you considering exploring the new frontier in 2020:

1. Bitcoin (BTC)

Bitcoin is the largest cryptocurrency on the crypto market. Since the creation of Bitcoin, it has grown through much criticism and disdain to become the most valuable cryptocurrency all over the world. The current price of Bitcoin is something to write home about, but more than that, it promises to break more grounds in the future, and 2020 will probably kick-start a new progress.

Bitcoin has a maximum supply of 21 million Bitcoins; presently, over 85% of the cryptocurrency has been mined with only about 3 million left to be mined. This already sets the tone for scarcity with the world’s population teeming to nearly 8 billion people. As the fight for a decentralized system rises more and more, there is an expected steady growth in the adoption of Bitcoin as a mode of payment.

In 2020, Bitcoin will still be the most dominant cryptocurrency and first choice for any investor seeking for a safer investment in the cryptocurrency ecosystem. More so because Bitcoin will undergo “halving – a situation in which the Bitcoin block reward is halved.”

When Bitcoin halved in 2012, it moved significantly from $11 to $1,100 within a year; the second halving in 2017 birthed an unbelievable $700 to over $20,000 rise at the end of 2017. It may be hard to precisely determine what Bitcoin may rise to this year, but it will be massive with an expected 1000% increase.

Read Also: Investing in 2020: what you need to know

2. Ethereum (ETH)

Ethereum was created by Vitalik Buterin in 2014 as a support for building crypto-based decentralized applications. Ether is the cryptocurrency of the Ethereum blockchain.

Ethereum peaked towards the start of 2018 when 1 ETH was worth over $1,400. Ether, today, is worth about $200 despite the many negative comments the technology has faced since its inception. As a strong support for creating many other cryptocurrencies, Ethereum will surely be a sought-after cryptocurrency in 2020, especially for those who are seeking to offer decentralized services.

Its smart contracts can encourage activities that will assist organizations to perform better and optimize their business processes effectively.  Ethereum transactions are quick with transaction time as low as 15-20 seconds. This makes Ether cash an ideal instrument for exchanging cash, and this will help to foster more adoption in the coming months.

Ethereum also intends to launch the Ethereum 2.0 in 2020 to improve security and empower significantly faster transactions. All of these make Ethereum a viable cryptocurrency to invest in 2020.

Read Also: Investing in 2020: What You Must Know

Final Words

Cryptocurrency or the blockchain tech is a big deal which has not been fully unveiled.

As technological innovations such as machine learning, cognitive automation, and artificial intelligence are growing, the crypto tech will also gain ground by fixing the security issues common to those technological innovations. Eventually, investments on cryptocurrencies would yield very high ROIs.