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Deep Blue Blog

This may be the ideal time for Bitcoin investors

While initial investors in cryptocurrency were often those with significant computer literacy, for several of the largest cryptocurrencies such as Bitcoin, this is certainly no longer the case.  Bitcoin (BTC) is now accepted as payment by large businesses worldwide and has become a regular alternative asset of several large investment houses.  These institutions love the asset diversification potential as well as the promise that blockchain will become a established business medium via smart-contracts.

Despite the clear benefits of owning BTC, the sensitivity of crypto's price to geopolitical and regulatory events have intimidated many institutional investors.  After all, while it is hard to ignore the 75%+ annual return over the past decade, the currency has also shown large swings that kept many investors on edge.  For pension managers and sovereign wealth funds, it is difficult to explain to clients why it makes sense to ride out the volatility. 


As of late however, things may be changing.  Bitcoin has begun to demonstrate more pricing stability than ever.  Stability means that option prices on BTC should be coming down.  If that is the case, there may not be a better time to lock in the optionality to leverage BTC future growth. 


Bitcoin historically operated in cycles, with a typical cycle starting with 54-64% draw-down, followed by a period of stagnation and an acceleration in price. If history is any indicator, any long period of stagnation is followed by a similar period of growth. For example, in the year 2021 a slow 6 months was followed by a 6 month period of incredible growth.

The gap between the 7 day high and low of Bitcoin is also an indicator to this stability, with only 4.9% volatility. That percentage indicates that right now, Bitcoin is more stable than 95% of its entire history. On a 30 day scale, Bitcoin is 97% less volatile than ever previously recorded. This is truly unprecedented, even for the typical post bear-market stability. The trading volume for futures and options in Bitcoin is also at a nearly all time low and the market is pricing it with incredibly low volatility. But the fact of the matter is, there is a 95% likelihood that Bitcoin will return to higher volatility. The digital market is still suffering from residual illiquidity from 2022, and in its search for liquidity, it is finding it in Bitcoin. With a "risk off" type sentiment, BTC is currently trading 64% higher than Ethereum.

So, all-in on BTC?  Not so fast.  A prudent approach would be to structure the investment in BTC such that the principal invested will be safe from a market shock.  It is precisely for this reason that Deep Blue investigated hundreds of possibilities and ultimately selected the PPN structure.  Safety paired with Exposure to the strongest cryptocurrency in the world.

The graphs below show historic volatility in Bitcoin:

BTC Price 2021.png
BTC PRice 2022.png
BTC Price 2023.png
Contact Deep Blue to see how your institution can benefit from a BTC PPN today.


+1 (212) 826-7053


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