September 4, 2019
Using crypto loans to hedge is both a strong and flexible liquidity strategy for traders that want to stay safely in the market and out of the market simultaneously. It’s essentially a way for traders to win in multiple ways while minimizing risk. On YouHodler, traders can take a crypto backed credit line to get cash while also letting their portfolio work for them without having to sell any assets.
A common problem faced by many modern traders is the search for liquidity when cash is needed most. Some traders think this is an easy solution. Simply head to their favorite exchange, sell their crypto of choice and enjoy the new pile of cash. Sure, this is a basic strategy but there are several problems with it.
Firstly, selling assets means this asset can not provide a return on investment in the future. In addition, if a trader sells assets during a bear market, there is a good chance they lost money on that transaction. However, YouHodler helps users get money while also avoiding losses in the market as well. Here’s how.
Let’s use a specific event as an example. On August 29, Bitcoin encountered a rapid drop down to the ~$9,400. Traders that sold at that level got out of the market, received cash and avoided any future loss. However, if we fast forward a few days to September 3rd, we see Bitcoin jumped up again to ~$10,300. While all those traders are kicking themselves for not being patient, many YouHodler users are now enjoying nice profits.
These traders took a crypto loan (with LTV as high as 85%) to access liquidity and hedge their portfolio against further loss. Meanwhile, their collateral on YouHodler continued to appreciate and grow. Even though they are in the custody of YouHodler, the user still contractually owns the crypto assets. Once the loan is repaid in full, the user receives the crypto along with any additional profits in the process.
YouHodler strives to make its platform user-friendly and flexible for its users. One should have complete freedom to control their assets without any hidden fees or restrictions. Perhaps the most attractive part of hedging on YouHodler is the highly customizable exit strategy. With integrated crypto charts and 24/7 support, borrowers always know where their assets stand and when it’s finally time to exit. When this time comes, borrowers have several options:
Close Now: Ask YouHodler to sell the collateral and use the funds to pay off the loan and send the remaining profit back to the borrower.
Repay a loan: Simply pay off the principal and interest to free the crypto assets and have them returned to the borrower.
Extend PDL: Users have the opportunity to extend the Price Down Limit (margin call) on a loan by adding additional collateral.
Walk Away: With YouHodler’s industry best LTV of 90%, users can receive the loan and just walk away with 85% of the value of their asset without having to repay. There are no consequences for this option. The users keep the money and the loan is closed.
Hedging on YouHodler is a smart and flexible way to unlock liquidity and navigate in realms both inside and outside of the market simultaneously. Users can keep 85% of their assets in value regardless of the outcome while still making their crypto portfolio work for them and provide additional returns.
On YouHodler, it’s an easy tool for the casual HODLer and for the advanced trader. So try it out today and be sure to let us know what you think at the social media links below.
Editor-in-Chief of the YouHodler blog. Connect with him about writing techniques, cryptocurrency, and music.
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YouHodler is regulated in the EU (Italy) and Switzerland, and does not have a regulated UK entity. YouHodler is NOT regulated by the FCA, and protections offered under UK law do not apply.
YouHodler promotions are not targeted at UK investors, and bonuses or loyalty programs like the rewards programme or sign-up offers will not be available to residents of the UK. You can learn more about the services offered to UK customers here.
Do not invest with YouHodler unless you’re prepared to lose all your money or tokens invested. Crypto Currency is considered as a speculative and high‑risk investment and you are unlikely to be protected if something goes wrong. Take 2min to learn more about risks.
YouHodler is regulated in the EU (Italy) and Switzerland, and does not have a regulated UK entity. YouHodler is NOT regulated by the FCA, and protections offered under UK law do not apply.
YouHodler promotions are not targeted at UK investors, and bonuses or loyalty programs like the rewards programme or sign-up offers will not be available to residents of the UK. You can learn more about the services offered to UK customers here.
Do not invest with YouHodler unless you’re prepared to lose all your money or tokens invested. Crypto Currency is considered as a speculative and high‑risk investment and you are unlikely to be protected if something goes wrong. Take 2min to learn more about risks.