Summary:
Presto Labs suggests a market-neutral strategy to profit from the Mt. Gox repayments by betting on Bitcoin (BTC) strength and against Bitcoin Cash (BCH).
The strategy is based on the different investor sentiments towards BTC and BCH, with BTC investors expected to be more diamond-handed.
Presto's analysis shows four times larger selling pressure for BCH compared to BTC, creating a potential pair trading opportunity.
The Mt. Gox repayments present a unique scenario for traders to leverage the differing supply/demand dynamics of BTC and BCH.
Disclaimer: This is not financial advice. Conduct thorough research and understand the risks before investing.
Mt. Gox Repayments: A Trading Opportunity?
The long-awaited repayments to creditors of the defunct Mt. Gox exchange are finally underway, and this has sparked a trading opportunity for savvy investors. Singapore-based trading firm Presto Labs suggests a market-neutral strategy that capitalizes on the supply/demand dynamics of both Bitcoin (BTC) and Bitcoin Cash (BCH).
The Strategy:
- Long BTC: Investors are expected to hold onto a portion of their BTC repayments, due to their long-term belief in the asset. This suggests lower selling pressure for Bitcoin.
- Short BCH: The BCH investor base is considered weaker, with a higher likelihood of selling their entire repayment. This implies stronger selling pressure for Bitcoin Cash.
Presto's analysis reveals a significant discrepancy in the expected selling pressure between BTC and BCH, with BCH facing a four times larger sell-off compared to BTC. This creates a potential pair trading opportunity where investors can profit from the relative price movements of the two cryptocurrencies.
Key takeaway: The Mt. Gox repayments offer a unique scenario where the differing investor sentiment towards BTC and BCH can be leveraged for potential profit.
Disclaimer: This information is not financial advice. It's crucial to conduct thorough research and understand the risks before making any investment decisions.
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