Bitcoin Mercantile Exchange (BitMEX), one of the largest cryptocurrency derivatives exchanges in the world, says that they “no longer think that dated volatility-related bets are an effective way to protect portfolios because they are now too expensive.”
THe BitMEX team stated:
“We believe that inflation linked government bonds could be the main pillar going forwards as part of one’s protection strategies, as more of a tactical position. While gold, Bitcoin and to a lesser extent the yen, could be the other main pillars.”
BitMEX argues that the economic challenges and problems we’re experiencing today may be attributed to the outdated structure of the legacy financial system. The exchange operator claims that the COVID-19 outbreak is now an “aggravating factor” which will make current economic problems even worse, however, it’s not a “fundamental” cause.
The exchange said that the longer-term economic damage that will be “caused by the extent of deleveraging that may follow, is somewhat inevitable and cannot really be blamed on the virus” because if it wasn’t the pandemic then “something else may have come along.”
Last month, the S&P 500 Index had recovered after crashing, but it was still down 7.9% YTD, when BitMEX published its report on May 22, 2020.
The S&P 500 rallied 35.9% after the March 12, 13 2020 crash which completely took down several Fintech and crypto firms including Adaptive Capital.
The BitMEX team confirmed:
“Remarkably April 2020 witnessed the largest monthly rise in the stock market since 1987, all while millions of Americans lost their jobs at the same time. What this indicates is that liquidity considerations, driven by Fed policy, are outweighing weak economic fundamentals.”