XBTO launches game-changing XBTO Pro Trading (powered by Stablehouse) to empower institutional investors
XBTO Launches Game-Changing XBTO ProTrading (Powered by Stablehouse) to Empower Institutional Investors
ProTrading is the first major product launch since XBTO announced its acquisition of Stablehouse in August 2023, pending regulatory approval.
The platform, powered by Stablehouse, delivers advanced execution capabilities combined with top-tier client asset protection and service for institutions and qualified investors.
Bermuda (Monday 9th October, 2023) - XBTO, a comprehensive platform for digital assets management and tailored investment solutions, today, with its partner company Stablehouse Ltd., introduced XBTO ProTrading (PT). This is a state of the art platform designed specifically for institutions and qualified investors.
XBTO ProTrading (PT) addresses critical challenges faced by both qualified and institutional investors in the digital asset sector, offering advanced execution capabilities alongside unparalleled client asset protection and service. ProTrading marks the first major product release since XBTO's announcement of its pending acquisition of the digital asset custody & trading platform, Stablehouse, in August 2023. This partnership has enabled XBTO to rapidly expand its suite of services for institutional investors in digital assets.
One of the major issues faced by investors is inefficient execution, which can result in delayed trades and missed opportunities. XBTO ProTrading directly tackles this, optimizing trading processes with professional trading views, enhanced order support, and optimal liquidity via its Smart Order Router and XBTO’s comprehensive counterparty network.
Another prevalent concern revolves around the risks inherent to digital asset trading. Clients frequently express concerns about fund security and potential legal vulnerabilities. XBTO ProTrading prioritises the protection of funds, ensuring that clients don't have to worry about the security of their funds or potential legal vulnerabilities. By offering segregated client accounts that are auditable on the blockchain and providing comprehensive legal safeguards, XBTO shields customer assets from potential creditor claims, instilling confidence and peace of mind among users. XBTO's commitment to top-tier security and legal compliance is showcased by its operation under the Bermuda Monetary Authority, demonstrating a proactive choice of a progressive jurisdiction.
This innovative product encompasses the XBTO Trader UI, and a ProTrading access account seamlessly hosted within the XBTO-Stablehouse Custody platform. The rollout will commence with early access on Oct. 9, followed by official general availability on Oct. 25.
Commenting on the launch was Javier Rodriguez-Alarcon, CCO, XBTO: "We believe in giving access to professional-grade trading services to institutional clients to facilitate an effective adoption of digital assets. With XBTO ProTrading, we're making it possible for qualified investors, regardless of their scale, to experience secure, efficient and high-touch trading that was previously accessible only to a segment of experts. Our priority is to offer confidence and safety while facilitating a seamless trading and custody experience.``
The platform also offers high-touch service, providing a personalised trading experience. With features like a dedicated Relationship Manager, an OTC Trading Desk for customised order execution, and accessibility to an extensive network of top-tier liquidity providers, XBTO ProTrading ensures that users have the support and services needed for successful trading.
Javier concluded: “XBTO ProTrading offers a robust alternative to the current digital asset trading landscape, offering a holistic platform that enhances the trading experience and provides a unique value proposition for both qualified and institutional investors. Investors are encouraged to explore and register for the XBTO Pro Trading early access program, embracing a new era of secure, efficient and high-touch digital asset trading and custody."
About XBTO
Founded in 2015, XBTO stands as a prominent platform in the world of digital assets, specialising in tailored investment solutions for sophisticated non-US investors and institutions. With its team boasting over eight years of expertise in digital assets and an impressive twenty-year track record in traditional finance, XBTO occupies a unique position at the crossroads of these two financial realms. This experience equips XBTO to provide expert insights and innovative solutions, enabling clients to navigate the ever-evolving landscape of digital assets with confidence and precision.
Stablehouse Ltd., recently acquired by XBTO in August 2023 (subject to regulatory approval), is licensed as a digital asset business regulated by the Bermuda Monetary Authority with a class M License to operate as (a) a payment service provider business utilising digital assets, which includes the provision of services for the transfer of funds; (b) a digital asset exchange (c) a digital asset services vendor and (d) a business providing custodial wallet services.
For press enquiries, please contact: xbto-global@archetype.co
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The full breakdown
In our first article, "Navigating Crypto Volatility: The Advantages of Active Management," we explored how the high volatility and low correlation of digital assets with traditional asset classes create unique opportunities for active managers. We discussed how these characteristics enable active managers to execute tactical trading strategies, capitalizing on short-term price movements and market inefficiencies. Building on that foundation, we now turn our attention to the unique market microstructure of digital assets.
Conducive market microstructure of digital assets
The market microstructure of digital assets - a framework that defines how crypto trades are conducted, including order execution, price formation, and market interactions - sets the stage for active management to thrive. This unique ecosystem, characterized by its continuous trading hours, diverse trading venues, and substantial market liquidity, offers several advantages for active management, providing a fertile ground for sophisticated investment strategies.
24/7/365 market access
One of the defining characteristics of digital asset markets is their continuous, round-the-clock operation.
Unlike traditional financial markets that operate within specific hours, cryptocurrency markets are open 24 hours a day, seven days a week, all year round. This continuous trading capability is particularly advantageous for active managers for several reasons:
- Immediate response to market events: Unlike traditional markets that close after regular trading hours, digital asset markets allow managers to react immediately to breaking news or events that could impact asset prices. For instance, if a significant economic policy change occurs over the weekend, managers can adjust their positions in real-time without waiting for markets to open.
- Managing volatility: Continuous trading provides more opportunities to capitalize on price movements and volatility. Active managers can take advantage of this by implementing strategies such as short-term trading or hedging to mitigate risks and lock in gains whenever market conditions change. For instance, if there’s a sudden drop in the price of Bitcoin, managers can quickly sell their holdings to minimize losses or buy in to capitalize on the lower prices.
Variety of trading venues
The proliferation and variety of trading venues is another crucial element of the digital asset market structure. The extensive landscape of over 200 centralized exchanges (CEX) and more than 500 decentralized exchanges (DEX) offers a wide array of platforms for cryptocurrency trading. This diversity is beneficial for active managers in several ways:
- Risk management and diversification: By spreading trades across various exchanges, active managers can mitigate counterparty risk associated with any single platform. Additionally, the ability to trade on both CEX and DEX platforms allows managers to diversify their strategies, incorporating different levels of decentralization, regulatory environments, and security features.
- Arbitrage opportunities: Different venues often exhibit price discrepancies, presenting arbitrage opportunities. For example, managers can buy an asset on one exchange at a lower price and sell it on another where the price is higher, thus generating risk-free profits.
- Access to diverse liquidity pools: Multiple trading venues provide access to diverse liquidity pools, ensuring that managers can execute large trades without significantly impacting the market price.
Spot and derivatives markets (Variety of instruments)
The seamless integration of spot and derivatives markets within the digital asset space presents a considerable advantage for active managers. With substantial liquidity in both markets, they can implement sophisticated trading strategies and manage risk more effectively.
For instance, as of August 8 2024, Bitcoin (BTC) boasts a daily spot trading volume of $40.44 billion and an open interest in futures of $27.75 billion. Additionally, derivatives such as futures, options, and perpetual contracts enable managers to hedge positions, leverage trades, and employ complex strategies that can amplify returns.
Overall, the benefits for active managers include:
- Hedging and risk management: Derivatives offer a powerful tool for hedging against unfavorable price movements, enabling more efficient risk management. For instance, a manager holding a substantial amount of Bitcoin in the spot market can use Bitcoin futures contracts to safeguard against potential price drops, thereby enhancing risk control.
- Access to leverage: Managers can use derivatives to leverage their positions, amplifying potential returns while maintaining control over risk exposure. For instance, by employing options, a manager can gain exposure to an underlying asset with only a fraction of the capital needed for a direct spot purchase, thereby enabling more capital-efficient investment strategies.
- Strategic flexibility: By integrating spot and derivatives markets, managers can implement sophisticated strategies designed to capitalize on diverse market conditions. For instance, they may engage in volatility selling, where options are sold to generate income from market volatility, regardless of price direction. Additionally, managers can leverage favorable funding rates in perpetual futures markets to enhance yield generation. Basis trading, another strategy, involves taking offsetting positions in spot and futures markets to profit from price differentials, enabling returns that are independent of market movements.
Exploiting market inefficiencies
Digital asset markets, being relatively nascent, are less efficient compared to traditional financial markets. These inefficiencies arise from various factors, including regulatory differences, market segmentation, and varying levels of market maturity. For example:
- Pricing anomalies: Phenomena like the "Kimchi premium," where cryptocurrency prices in South Korea trade at a premium compared to other markets, create arbitrage opportunities. Managers can exploit these by buying assets in one market and selling them in another at a higher price.
- Exploiting mispricings: Active managers can identify and capitalize on mispricings caused by market inefficiencies, using strategies such as statistical arbitrage and mean reversion.
The unique aspects of the digital asset market structure create an exceptionally conducive environment for active management. Continuous trading hours and diverse venues provide the flexibility to react quickly to market changes, ensuring timely execution of trades. The availability of both spot and derivatives markets supports a wide range of sophisticated trading strategies, from hedging to leveraging positions. Market inefficiencies and pricing anomalies offer numerous opportunities for generating alpha, making active management particularly effective in the digital asset space. Furthermore, the ability to hedge and manage risk through derivatives, along with exploiting uncorrelated performance, enhances portfolio resilience and stability.
In our next article, we'll delve into the various techniques active managers employ in the digital asset markets, showcasing real-world use cases.
