In the past month or there has been increased turbulence in the crypto industry, with prices of the major coins like Bitcoin and Ethereum taking a knock in price.
But the causes and dynamics of this dip are quite different to previous years, and this says a lot about how the industry is changing – and exchanges are looking to address the new type of investor.
Notably, crypto trading has become closer to established asset and stock trading recently. Financial instruments like futures contracts, exchange traded funds, short selling, and portfolio diversification are all here or coming on the scene shortly. This had a noticeable effect on the current dip with a less steep but more sustained slide in prices, much more similar to conventional market behavior.
Furthermore, while most coins took a beating there was a more diverse set of outcomes for different cryptocurrencies than in previous dips. The whole industry is maturing and becoming more like a conventional stock market.
KuCoin, and exchange launched last year, is aiming to target the new investor behavior with a unique benefit: trading pairs. Here’s how it works.
Trading pairs for hedged investments
The concept of trading pairs is a very standard tool in an investment manager’s repertoire, but it is all but unused in crypto. It involves investing in one target stock or asset while short selling another asset that is highly correlated with the target asset.
For example, let’s say you’re really bullish on Visa’s stock because of a new credit card technology they’re releasing. In order to hedge your bets against overall economic downturn or industry contraction that would wipe out your gains on Visa, you could short sell a certain amount of Mastercard stock along with your Visa long position.
This “insulates” your investment against other variables, because if the industry takes a hit you’ll recoup some of your investment with the short sell on Mastercard. This is especially interesting in crypto, where a big dip can leave an otherwise well-performing coin in the red.
KuCoin are aiming to get big market share by providing a wiser range of Bitcoin Cash trading pairs than any other platform. Bitcoin Cash (BCH) has been very interesting for investors of late, climbing into the thousands soon after launch.
A Wide Range of Options
KuCoin have the following Bitcoin Cash trading pairs as of last week:
The entire platform uses the KCS token which also allows holders to earn rewards simply by holding, since KuCoin distribute some of their income with holders of the token.