Navigating the Next 12 Months in Bitcoin: Three Tailored Strategies

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In the world of Bitcoin, a period of six to twelve months can bring about significant change. Several events on the horizon have the potential to create bullish movements in Bitcoin’s price, however there is still macroeconomic uncertainty in inflation, global growth and international relations. Below, we outline these events and propose three ways investors can use structured products to position themselves against uncertainty, according to their risk appetite:

Upcoming Events

Bitcoin Halving (April 2024)

Every four years, Bitcoin miners experience a halving event, which cuts their rewards by 50%. This decrease in mining rewards leads to a reduced supply of Bitcoin being sold on the market, creating a so-called “stock to flow” effect. Historically, these halving cycles have resulted in medium to long-term price appreciation for Bitcoin.

Spot ETF in the US (H2 2023)

The Securities and Exchange Commission (SEC) is set to consider a number of spot ETF applications in the US this year. Notably, BlackRock, the world’s largest asset manager, is among the applicants. Their track record boasts a success rate of 576 approved ETFs with just one disapproval. An approved Bitcoin ETF could signify a watershed moment for digital asset legitimacy in the US.

End of Central Bank Hiking Cycle (Q4 2023) 

The Federal Reserve has raised interest rates by 5 percentage points since March 2022 to mitigate the highest U.S. inflation rates in four decades. With inflation starting to fall globally, it’s expected that we’re nearing the end of the rate-hiking cycle. If Central Banks pause or even reduce rates, we could see a surge in risk assets, with digital assets and technology stocks likely to benefit.

Ripple and the SEC (Q4 2023)

The court case between Ripple and the SEC has potential implications for the entire digital assets industry. The court recently ruled that Ripple’s XRP token is not a security, although its sale can be classified as such under specific circumstances. A favourable final verdict for Ripple could buoy the entire crypto industry.

Strategies to take advantage of Bitcoin events

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Investors and traders have a unique opportunity to strategically position themselves in the Bitcoin market. Here, we outline three strategies — each tailored for different risk appetites.

Conservative Strategy: 90% Principal Protected Notes with Bullish Participation

This investment strategy is ideal for investors seeking to participate in Bitcoin’s potential upside with a high level of capital protection. The Principal Protected Note (PPN) allows investors to participate in 65% of Bitcoin’s price appreciation from the initial spot level up to a predetermined cap level. The maximum loss for this investment is limited to 10% of the initial investment. This strategy may suit investors who expect the underlying price of Bitcoin to be above the initial fixing level at expiry.

Optimistic Strategy: Bitcoin Discount Note

For investors who view the next 12 months as positive for Bitcoin, the Bitcoin Discount Note may be the ideal choice. The Discount Note allows investors to enter a long position in Bitcoin for less than its current price if the expiry price is below the cap price. The maximum return is limited to a predetermined price. This strategy may suit investors who have a stable to moderately bullish view of Bitcoin.

Aggressive Strategy: Bitcoin Bull Call Spread

The Bitcoin Bull Call Spread strategy offers leveraged upside exposure to Bitcoin, with the potential for maximum returns if Bitcoin expires at or above the cap price at maturity. The maximum loss, in this case, is the initial investment amount. This aggressive strategy may suit investors who expect the underlying price of Bitcoin to be significantly above the strike price at expiry.

As the Bitcoin landscape continues to evolve, these tailored strategies can equip investors with the tools they need to navigate upcoming event risk, whether they are conservative, optimistic, or aggressive. Whether you’re seeking to protect your capital, secure a discount on Bitcoin, or leverage Bitcoin’s upside, structured products can provide a strategic solution for your investment needs.

These are innovative solutions tailored to suit various market conditions and investor expectations. To learn more about these strategies and how they could fit into your investment approach, don’t hesitate to reach out to our expert investment team.

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