Generating returns from your BTC and ETH holdings.
Holders of BTC and ETH bear violent price swings but often completely miss out on the potential interest and returns that can be generated from holding the coin.
The yield that long-term coin holders can receive ranges from 4–50% per annum depending on risk appetite. We highlight some common ones below.
Loaning out your coin yields about 4–6% on BTC and 5–7% on ETH, depending on the level of collateralisation required. This is relatively low-risk and should be the minimum base interest expected on coin deposits.
2. Futures/Forwards Spreads
Market-neutral spreads against futures and forwards are yielding about 15.3% annualised for both BTC and ETH for the nearest contract on Bitmex. The higher yield comes with greater difficulty as these spreads usually need to be executed through algorithmic trading.
Selling call options against your coin holdings can generate very high returns. This is a particularly appealing strategy for long-term holders because the absolute worst case-scenario is that you have to take profit on the coin at the strike level of your choosing. Otherwise, you will receive the premium on the option in full at expiry.
For example, if you sell an ETH call option with strike at 300 and expiry end-December, the yield generated on that is about 40% annualised. If ETH is above 300 level at expiry, you would be obligated to sell ETH at 300 (not too bad) and if it is below 300 by end-December you will realise the full return from the premium.
Higher strikes will typically generate lower returns. A 350 strike with the same details generates about 26% return.
Feel free to comment or contact us if you have any questions.
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