Why Should We Buy Crypto Options on MoonXBT in Light of Interest Rate Hike?
According to the minutes of its January meeting, the US Federal Reserve is ready to raise interest rates and sell off its $9 trillion balance sheet. This echoes the market expectation that the Federal Reserve could hike interest rates as early as mid-March to rein in the 40-year high inflation rate of 7.5%.
Higher rates would potentially drive investment to lower-risk assets, compared to the iskier cryptocurrencies. An interest rate rise would not come as a complete surprise in the crypto community. Since the fourth quarter last year, cryptocurrencies have been volatile, suffering the impacts from the widely anticipated interest rate hike environment. In late January, Bitcoin plunged from its November peak of close to $69,000 to a six-month low below $38,000. Ethereum traded dropped from above $3,250 in mid-January, 2022, to below $2,250 on January 25.
An interest rate rise is not only anticipated in the US. In February 2022, Joachim Nagel, the new chief of German central bank Bundesbank, joined the Dutch central bank chief Klaas Knot in urging the European Central Bank to raise interest rates within the year. In December 2021, the Bank of England already raised interest rates despite its previous dovish stance. With the global market being at a heated discussion of the interest rate hikes, the crypto community anticipated that the volatility of crypto prices will remain a norm in 2022. Bank of America’s global crypto and digital asset strategist Alkesh Shah told Fortune gave an estimate of the next three to six months when talking about the timeframe for cryptocurrencies’ temporary price drop.
Cryptocurrencies are known for their volatility. The last crypto “ice age” happened at the end of 2017 and early 2018, during which bitcoin took a slump from $20,000 to below $4,000 more than a year later. However, after the 2017–2018 “ice age”, cryptocurrencies bounced back to another “heyday” around the world. “You have to be comfortable with the swings and you have to be comfortable also losing your money.” Anjali Jariwala, certified financial planner, certified public accountant, and founder of Fit Advisors, said in an interview with CNBC. The price being at a low point would mean a golden time for investors to invest in cryptocurrencies, as the price would bounce back very soon.
If the interest rate rise has led investors to reconsider their level of risk tolerance, crypto options, known for their limited risk and unlimited profits, would be even a more recommended trading choice. Currently, a few exchanges offer options trading services, which is also coming up on MoonXBT, another leading crypto exchange. This will make options trading simple for Crytonauts seeking profits.
MoonXBT offers the lowest option premium, half the cost of other mainstream exchanges. This means a 50% discount and a possible double-profit when traders buy options. Investors using MoonXBT are highly likely to rake in higher profit for crypto options trading. Furthermore, having zero need to worry about liquidation, investors will lose only their premium for purchasing options in the worst-case scenario.
The expiry time of an option is also significant in options trading, which is the due time for an investor to exercise his or her right to buy or sell cryptocurrencies. The longer the expiry time of an option is, the lower the risk the investor will tolerate. The long lead-time will give investors more time to wait for the price of the cryptocurrency to bounce back or hit the target price. For those who want to gain more profit, options with shorter expiry times and lower premiums can be their choice.
In order to boost trade volumes, crypto exchanges usually offer options with shorter expiry times, ranging from five minutes to one day. However, at MoonXBT, the expiry times of options offered range from five minutes to six months — longer than what most exchanges offer. This could give investors a wide range of choices and trading strategies.
In terms of product types, MoonXBT provides Warrant Options, Touch Options, American Standalone Options, and European Spread Options. The four types of options are designed to cater to investors with different demands. For beginners, Warrant Options are a choice to start with, while for experienced traders wishing to manage risk, European Spread Options can be their go-to option. For those aiming at locking in early profits and reinvesting to accumulate wealth faster, American Standalone Options are their best choice. For prudent investors who want to be fixed and compounding returns in horizontal and trending markets, Touch Options will be the one. With the diverse types of options, different investors can find their ideal options to purchase matching their trading strategies.
In Early -March 2022, warrant options will be made available at MoonXBT and the remaining three types of options service will be rolled out in one month. Just in time for investors to capture the ideal trading trend in light of interest rate hikes globally.
MoonXBT is the world’s first social cryptocurrency trading platform, with headquarters in the Cayman Islands and offices in Singapore, Hong Kong, Malaysia, South Korea, Japan, and Vietnam. At present, MoonXBT provides contract trading, social interaction, and one-click copy trading services for global traders and is committed to building a closer blockchain ecosystem. For more information, please visit www.moonxbt.com.