Leading fintech firm Plus500 has revealed a new instrument to allow its clients to trade the ten most popular and established Cryptocurrencies in a single transaction.
The Crypto 10 Index, constructed by index software company BITA, offers traders the ability to track the performance of the wider asset class, with the benchmark allowing investors to trade market sentiment and volatility of the crypto market in real-time whilst minimising risk of exposure to sharp movements in a single currency.
The move reflects the growing perception of cryptocurrencies as a means to hedge against the broader pool of traditional instruments, with investors seeing this asset class as a means to further diversify their portfolios.
Traders can choose from multiple crypto and forex pairs too, bringing new ways to trade volatility to hedge against inflation and market uncertainties.
The Crypto 10 Index is just one of over than 2,500 underlying global financial instruments offered by Plus500, comprising equities, indices, commodities, options, ETFs, foreign exchange and cryptocurrencies.
The Promise of Crypto Assets
The top cryptocurrencies recorded a 159% increase in market value between January 5 and December 2020. The bullish narrative continued well into 2021, with Bitcoin reaching an all-time high of $64,863 in April, reflecting increased mainstream awareness of the world's first decentralized cryptocurrency.
Meanwhile, decentralised finance (DeFi) applications on the Ethereum protocol have captured the imagination of both corporates and investors, as have NFTs.
New projects, scaling solutions and network launches have dominated this landscape, propelling the crypto market to a market cap of $2 trillion for the first time ever in April 2021.
1. Inflation Might Be Here Sooner Than We Thought
High amounts of fiscal stimulus and loose monetary policies might have helped countries battle the pandemic-induced economic devastation. But it has raised inflationary pressure.
In the latest meeting of the US Fed, on June 16, 2021, the central bank projected personal consumption expenditure (PCE) to increase to 3.4% this year.
At the same time, the central bank has no intention to raise interest rates, while continuing with its bond-buying program at $120 billion per month.
Devoid of influence from any central bank, cryptocurrencies offer the means to hedge against economic uncertainty and inflation risks. Bitcoin (BTC), in particular, with its limited supply, is considered digital gold.
It is traded as an inflationary hedge, which drove the digital currency’s price up more than 300% in 2020. In 2021, BTC came under pressure from Elon Musk’s comments on its energy inefficiency.
In addition, China’s crackdown on cryptocurrency mining in the nation was also a setback. However, the asset is here to stay, which can be seen from the way Bitcoin recovered from the China effect, rising 13% YTD on June 23.
From crypto hedge funds to venture capital, and asset managers to traditional corporate offices, cryptocurrency has become an accepted means for portfolio diversification.
Global economies and more traditional institutions are also adopting the new asset class, with the US is showing signs of embracing Blockchain technology and carving new regulations around digital assets.
Bloomberg predicts a price target of $100,000 for BTC by the end of 2021.
2. Bitcoin (BTC) is Not All That There is
The rise of alternative cryptocurrencies has also been a theme so far in 2021. While Cardano, Stellar and others have gained value due to the robust technology they are built on and the applications they promise, we have also seen coins like Dogecoin ride the wave of market sentiment.
On the other end of the spectrum, Ethereum is now the hotspot for DeFi’s explosive growth. With $49.49 billion worth of assets locked in these projects, investors and traders might be looking at a new dawn of financial innovations.
Cardano (ADA) is increasingly important to those worried about sustainability in crypto asset mining. Nicknamed “the green coin,” this asset is a promising and steady-performing addition to the crypto world, with returns of over 570% in Q1 2021.
Even setbacks against mainstream adoption, such as the recent US SEC lawsuit against Ripple (XRP), led to a significant rise in crypto prices. This volatility spells trading opportunities for CFD traders, who can use the contracts to enter into both long and short positions.
Plus500 is a market leader in the CFD sector, with its mobile innovation and customer-centric approach, offering superior trading conditions for its clients.
Why Traders Prefer CFDs for Crypto Trading
Contracts for Difference (CFDs) are preferred by a large percentage of traders worldwide to directly trading cryptocurrencies on exchanges. This is due to the multiple benefits that CFDs offer, including:
- Leverage: With leverage, traders gain much larger exposure to the market than the capital in their trading account alone can afford. This means that their profit potential is multiplied. However, leverage needs to be used wisely because it can also magnify potential losses if the markets move unfavourably.
- Asset Ownership: With CFDs, traders do not need to own the underlying asset being traded. They only speculate on the future price direction of the asset. This means that they can trade with much lower amounts than would be required to directly buy and sell assets.
- Trading Opportunities: Since they are speculating on price direction, CFDs provide trading opportunities in both rising and falling markets.
- No Exchange Wallet: To trade directly on an exchange, traders need to first open an exchange wallet and then manage their private key. Digital wallets are prone to malicious attacks and therefore increase the risk associated with trading cryptos.
Plus500 is leading industry positions in core markets. The latest Investment Trends Leverage Trading Report named the fintech group as the market leader in its key geographies (including Fastest-growing trading platform in UK[1], No.1 CFD provider in Germany[2] and Spain[3] and Best CFD mobile app in Australia[4]).
A Commitment to Financial Innovation
Since its inception, Plus500 has been committed to providing clients a technological edge via innovative products. This is a part of its ongoing strategy to continue to build an engaged and satisfied customer base across multiple regions of the world.
It is the strength and differentiation of its technology that has driven record financial performance for the company in 2020.
Plus500 ensures complete transparency in spreads, margins and prices of each asset. Traders also have access to the overall sentiment of market participants on the Plus500 platform, for each crypto asset.
They can set alerts to be notified when the percentage of buyers and sellers on the platform reaches a certain level.
With daily market news and analysis, free-of-charge trading alerts and simple yet powerful risk management and trading tools, traders can tackle crypto market volatility and use it to their advantage.
Plus500’s powerful proprietary technology ensures unrivalled ability to respond to news and market events and regulatory developments.
The technology platform is one of the most downloaded CFD trading apps on Google’s Play Store and Apple’s App Store. It has over 10 million installs on Google Play Store[5].
The app is also among the top 100 finance apps in the Google Play Store rankings in 30 countries and the Apple Store rankings in 41 nations[6].
Digital currencies offer huge potential for traders. Plus500, through its innovations, remains committed to ensuring easy and access to the cryptocurrency market for global investors.
[1] Year on year active trader numbers. Investment Trends 2021 UK Leverage Trading Report
[2] By total number of client relationships. Investment Trends 2021 Germany Leveraged Trading Report
[3] By total number of client relationships. Investment Trends 2021 Spain Leveraged Trading Report
[4] By own client ratings. Investment Trends 2020 Australia CFD Report
[5] Google Play as at 27 July 2021
[6] App Annie as at 27 July 2021
