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Cryptocurrencies and Beyond: TradFi Asset Integration for Stability
As evidenced by the recent price crash of Bitcoin (BTC) and the rest of the cryptocurrency market, it is clear that excitement can quickly fade once volatility sets in. Despite its potential for rapid financial gains and the thrill of its volatility, the very characteristics that create this allure can also be the cause of its downfall.
Unlike stocks, which can rise and fall separately, the overall cryptocurrency market can fluctuate like no other, drastically impacting portfolios and resulting in catastrophic losses if left unbalanced.
To offset this instability and find a balance between volatility, it is essential for a portfolio to integrate traditional derivatives and forex assets along with cryptocurrencies for a stable investment strategy. Doing so through stable platforms like MultiBank.io can help any trader quickly find a balance in an unbalanced market.
Why are cryptocurrencies so volatile?
The cryptocurrency market is notorious for making millions and taking millions from suspicious and unsuspecting traders. The problem occurs when BTC or Ethereum (ETH) experiences large market price swings in short periods of time like four or six hours.
The collateral damage to the rest of the market is usually amplified by a factor of 2 or 3 compared to these two heavyweights, so if BTC drops 5%, the market drops 10% or even 15%. If a trader’s portfolio is invested exclusively in cryptocurrencies, it is easy to see how quickly the value of those investments can deteriorate.
Finding Balance with Traditional Derivatives
Given the significant volatility of the cryptocurrency market, it is important to mitigate these risks by diversifying your portfolio through the inclusion of traditional derivatives. These traditional financial instruments can include things like contracts for difference (CFDs), options, and futures.
By providing exposure to more stable assets such as indices, stocks, and commodities, these instruments effectively protect against cryptocurrency market volatility and help stabilize a portfolio. Such an example might include a trader holding gold to offset the volatility of their cryptocurrency holdings, with gold being considered a “safe haven” asset that resists market instability.
The Power of Forex
Forex refers to the trading of foreign currencies and can be a great help in further balancing a crypto-heavy portfolio and improving stability during market turbulence. Forex markets involve the trading of several national currencies and operate very differently from cryptocurrency markets due to their significantly reduced volatility.
Due to their low-risk nature, forex investments can serve as an effective counterweight to high-risk assets such as cryptocurrencies. By trading national currency pairs such as GBP/USD or EUR/USD, traders can capitalize on geopolitical and economic trends without substantial risk of portfolio losses. As a highly liquid market with consistent returns, forex assets are an excellent addition to balance a portfolio.
MultiBank: Creating a Balanced Portfolio
MultiBank Group was founded in 2005 and is one of the world’s largest derivative financial institutions, enabling traders to easily integrate traditional and crypto assets into their portfolios. The Group serves over one million clients and operates under over 12 regulatory licenses to ensure all trading is trustworthy and extends this legacy to cryptocurrencies through its platform, MultiBank.io.
MultiBank.io offers traders a one-stop-shop solution to balance their portfolios with advanced trading tools and highly leveraged options. The platform allows traders to gain exposure to crypto derivatives while constantly having access to more stable traditional financial instruments.
The integration of crypto and traditional assets ensures that all traders can maintain diversified portfolios and effectively balance the volatile nature of crypto assets with stable traditional assets. Coupled with the company’s reputation for safety and user protection, this makes MultiBank a reliable choice for those looking to balance their portfolio.
Unlike other platforms, MultiBank demonstrates a strong commitment to regulatory oversight and transparency in all things, especially in an industry that relies almost entirely on trust. With MultiBank Group’s stable regulatory framework and history of regulatory compliance, traders can rest assured that they can trade with confidence.
Portfolio stability through innovation
On May 3, MultiBank Group unveiled the MultiBank.io platform, marking a significant milestone where crypto derivatives can meet traditional assets. Since then, the platform has continued to offer increasingly innovative features for traders to maximize the diversification of their investment portfolio.
Offering traders leverage options of up to 100x, traders can gain exclusive access to a unique range of Tether (USDT) pairs linked to stable traditional assets such as commodities, stocks and other asset classes. This integration between completely different asset classes creates a bridge between the cryptocurrency market and traditional finance (TradFi) for substantially more stable investment strategies.
And now?
While the cryptocurrency market offers many traders the allure of high risk and high reward, the inherent volatility requires traders to diversify their portfolios and prepare.
To avoid significant losses and maintain a stable portfolio, traders need to incorporate traditional derivatives and forex assets for a more balanced position in the market. Using the different portfolio options of MultiBank.io, traders can now find a true investment balance.