Profit by Securing the Decentralized Economy
ArrowTrade AG offers an actively managed certificate (AMC) which provides returns based on payout-generating Bitcoins through mining hardware and software. The AMC is bookable into the investor’s bank account and therefore part of her/his bankable portfolio.
The uncorrelated nature of Bitcoins and mining rewards add tremendous diversification benefits to a traditional investment portfolio.
How Bitcoin Mining Works
The Bitcoin blockchain is a complex mathematical protocol which allows transacting value (in the form of Bitcoins) over the internet. Users, including businesses and individuals, can transact globally over the blockchain by paying minimal fees while getting settlement times in the minutes. For the functioning of the blockchain and the reconciliation of the ledger (i.e. correctly documenting who owns how many Bitcoins), computing power is required. These resources are provided by individuals and institutions in the form of graphical processing units (GPUs). Institutions such as ArrowTrade AG experience economies of scale by operating several GPUs in one location with cheap access to electricity while streamlining maintenance of the units.
Why Bitcoin Is an Attractive Asset
Click the squares below to find out more about why ArrowTrade AG believes Bitcoin is an attractive investment opportunity.
Close to Zero Correlation with Other Assets
Bitcoin shows close to zero correlation with most other common asset classes such as equities, bonds and commodities. Interestingly, it’s the latter asset classes which comprise the bulk of a typical investment portfolio, and they are positively correlated. As such, adding Bitcoin to an investment portfolio has the potential to significantly improve the overall risk-return profile – collecting the free lunch of diversification.
Source: Pantera Capital
Unmatched Risk-Return Profile
Bitcoin’s Sharpe Ratio, which quantifies the return an investor can expect per amount of risk she/he takes, surpasses that of most other asset classes such as US stocks, real estate, bonds and gold. The attractiveness is due to Bitcoin’s astounding compound annual growth rate of over 200%.
Why Bitcoin Has Value: Scarcity
Bitcoin, in its essence, is similar to gold as it is scarce and serves as a store of value (e.g. as a hedge against inflation). Unlike gold, Bitcoin has no practical or ornamental purposes. Instead, its value can be easily transferred over communication channels such as the internet while not incurring storage costs.
Due to its similarity to commodities in its store of value function, the stock-to-flow model has been applied to value Bitcoin. This model assumes that with increasing scarcity of the asset (e.g. Bitcoin or gold) the value of the asset increases.
Approximately every 4 years, mining rewards of Bitcoin halve. The halving event essentially doubles the scarcity of Bitcoin, implying a drastic increase of Bitcoin’s price at the time of the event in May 2020. Interestingly, past halvings (in 2012 & 2016) have indeed led to price surges and the stock-to-flow model is able to explain 95% of Bitcoins historical price movements.
According to the model as applied by 100trillionUSD (first graph below), a fair Bitcoin price of USD 55’000 is to be expected after the next halving in May 2020. The model has also been applied by renowned German bank Bayerische Landesbank (BayernLB; second graph below).
A Not so Brief History of Bitcoin
Although Bitcoin has only been around for 11 years, its history began in the 70s, with many different contributors, that culminated in the publication of the Bitcoin whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008 by Satoshi Nakamoto.
Source: Ansel Linden / Bitcoin & Markets
Unique Investment Properties
Bitcoin Performance Sample
HOW TO GET STARTED?
We are in the process of obtaining a SRO license/membership in order to be an SRO affiliated financial intermediary and digital asset investment consultant. A qualified, skilled and experienced team of advisors specialized in tailored solutions for alternative assets, trading and advisory.
To help you with your individual needs, please contact us via email or phone.