Crypto Funds with Super Volatility
Direxion Asset Management LLC wants to list “leveraged” and “invested” crypto funds on the NYSE Arca, Inc. These funds could introduce even more volatility into the crypto-market because their value could go up by twice as much as bitcoin’s trading price. Conversely, the value could go down by just as much. If you’re prepared for huge gains, then you should also be prepared for equally huge losses. At the time of this writing, Direxion’s proposal is pending approval from U.S. Securities regulators.
Double Your Bitcoin?
According to Arca, these crypto funds, “will enhance competition among market participants, to the benefit of investors and the marketplace.” It has become obvious that the crypto-marketing is booming with current market capitalization now over $750 billion (CoinMarketCap). Cryptocurrencies have become popular with people from all walks of life. BBC just reported that millennials in Africa are turning to bitcoin and other cryptocurrencies as a way to increase their earnings. This can help them pay for things that many of us in more developed regions of the world might take for granted. To people in areas where the economic status is hostile or oppressive the idea of doubling your bitcoins through these crypto funds could seem like a miracle to many people. That’s IF you’re willing to take extreme risks. Use caution wherever the promises seem too good to be true.
These new crypto funds could further fuel the rampant craze and overwhelming demand for cryptocurrencies. Large crypto-exchanges like Binance, Bittrex, and Coinbase can’t keep up with the demand and have had to resort to suspending their operations on many occasions. Meanwhile, crypto asset managers have been working around the clock to draft and present crypto fund proposals to regulators.
In early December 2017, TMT Investments announced the launch of a $60 million crypto fund dedicated solely to funding blockchain startups all over the world. With so much money pouring into the crypto-market, chances are that everyone can get a piece of the pie. However, these crypto funds that are being proposed by Direxion seem a little too risky.
Caution! High Risk Temptations Oncoming!
The idea of doubling your bitcoin investment, as proposed by Direxion, might even lead people to start thinking of bitcoin and other cryptocurrencies as a way to gamble. This is probably why the U.S. Securities Exchange has put this proposal, among many others, on hold. Regulators definitely have their hands full.
Just a few days ago, regulators in Texas clamped down on BitConnect by ordering the company to stop selling crypto-related securities. After reviewing the company’s profile, the regulators determined that the company’s promise of generating millions of dollars in bitcoin had all the ingredients for a scam.
One Final Note
The spokesperson from Direxion chose not to provide additional comments regarding the details of their new crypto fund. It seems that if this proposal is approved, then it will introduce an even more extreme level of risk into the crypto-market. A great number of investors have issued numerous warnings about the enormous risk factors associated with crypto investments. However, this has done little to deter the masses, and it’s quite possible that this new crypto fund could attract many more investors.