DeFi’s Valour Engineers a Hedge for Bitcoin

Bitcoin investors looking for ways to lock in their gains without having to sell their beloved HODL stash have a new option.

DeFi Technologies, via its subsidiary Valour, has an innovative Exchange Traded Product (ETP) that trades inversely to the coin. They’re calling it Valour Short Bitcoin (SBTC).

Maybe you’ve ridden up from 26K in October to 73K in mid March, and then agonized on the recent fall back to the high 50s. If so, you’ve probably thought about how great it would be to lock in the gains at 70 without having to sell, since you’re dead certain Bitcoin 100K is right around the corner.

Well, now you can. Russell Starr, Head of Capital Markets at DeFi Technologies, told Modern Consensus, “As we launch the Valour Short Bitcoin ETP in the Nordics, we’re not just breaking new ground; we’re redefining strategic investment opportunities for seasoned investors. This innovative financial instrument, designed to inversely track Bitcoin’s price movements, empowers investors to profit from or hedge against market fluctuations.”

OK, that makes sense. But what’s with “Nordics”? What am I, Thor?

I asked Starr if that meant that the products would only be available in Scandinavia.

“People can buy these products globally,” Starr replied. “But the SEC currently prohibits these products from being listed in the US. They just allowed BTC and may not even allow Eth. So US investors pay the price of a short-sighted regulator.”

Oh ja, as they say in Sweden.

Valour praises itself for offering “fully hedged digital asset ETPs with low to zero management fees” but it’s my experience that the fees and correlations when a new tracking product appears can be pretty stiff. So be aware of that as you get ready to embrace the convenience of calling your guy at whatever overseas Schwab or Fidelity equivalent that’ll let you purchase a derivative an asset class that didn’t even exist 15 years ago.

So yeah, there’s a lot of financial engineering taking place here, but with bitcoin almost impossible to short – who’s gonna loan you their coins to sell? —this product will hopefully stimulate interest on the bull side by allowing someone to hedge without adding supply and applying downward pressure.

Meanwhile, the market can expect an explosion of products when it comes to the creation of these ETPs. Valour has been one of the leaders in this field, offering a wide variety of products listed across a bunch of European exchanges and broker platforms. They include exotica like Bitcoin Carbon Neutral, ETPs that function like crypto mutual funds (Valour Digital Asset Basket 10) and other products that track popular coins like Cardano, Solana and XRP.

It’s perhaps not surprising that a company whose advisors include Bitcoin maximalist Anthony “Pomp” Pompliano, co-founder of Morgan Creek Digital and host of the Pomp Podcast, would find ways to innovate.

As Starr told Modern Consensus, “It’s a testament to our commitment to pioneering novel ways for investors to navigate the dynamic crypto landscape, providing both flexibility and tactical advantages in portfolio management.”