Short LyCI behaves as an “anti-index” and bets against the Top 25 blockchain projects by market cap. When the performance of the market is negative, Short LyCI profits. It lets holders cash in on the expectation of a declining crypto market whilst being diversified across the main market indicators.
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Getting back to the topic, let’s examine some opposite scenarios where these unique instruments could come in handy.
LyCI, Bulls and HODLers rejoice!
The appeal of cryptocurrencies and blockchain technology is obvious for most people interested in the subject. The consensus among traders and investors is that we are witnessing the birth of a disruptive force, one that could play a huge part in remodeling all kinds of industries in the years to come. For Bitcoin “maximalists” for example, the creation of non-consficable, uncensorable, safe haven and austrian economics inspired “sound money” asset is a dream come true. Bitcoin does bolster many more features than previously discussed, but it looks like it will become a replacement for cumbersome and outdated, gold standard. After all, Bitcoin, besides the previously mentioned advantages, is objectively more easy to divide, transfer and keep custody than gold and other similar precious metals, certainly not an easy feat.
But LyCI also tracks many other assets, from smart contract platforms, including Ethereum and its security/utility tokens, stablecoins, all kinds of digitized assets and the exciting DeFI (Decentralized Finance) movement to privacy focused cryptocurrencies and projects with different kind of consensus mechanisms from PoW, like PoS and DPoS.
Lastly, the current global and financial situation doesn’t inspire much confidence and investors are quickly starting to recognize a possible paradigm shift. From negative yield government bonds to unrelentless inflation disguised as quantitative easing from central banks around the world, both institutions and retail investors seem to be yearning for something different and exciting.
Short LyCI and The Land of Bears
As efervescent as the crypto industry and market is, it’s also quite exposed to many types of negative events. In a blink of an eye, a smart contract on DeFI could fail, collapsing the entire sector like a house of cards, very much so like the previous DAO hack did back in 2016. Regulatory concerns are starting to progress into scary scenarios too, where privacy coins for example are facing increasing pressure, with delisting as a method of avoiding penalties from exchanges around the world. KYC/AML regulations are also tighten up, some rumours revealing that the next wave will take aim at open source developers, and even hardware wallets.
Sadly and sometimes uncalled for, bad press is also another factor that cryptocurrencies still haven’t been able to shake off, following on from the Silk Road days along with the usual exchange hacks, pyramid schemes and scandal reports. There’s also the question of (until now) failed scaling efforts, and therefore poor or negligible worldwide adoption.
On top of it all, another popular recent belief maintains that the start of futures trading, first CME—and recently BAKKT—affected the scene in a negative way, giving powerful actors more sophisticated, secure instruments to short the market away.
Head or Tails?
Although it could be tempting to conclude markets are doomed to irrationality and random chaos, that’s not entirely correct. Cryptocurrencies while theoretically having unlimited potential, are still part of an immature industry. Volatility is a direct reflection of their fragility. Any major event has a strong, marked effect, perhaps in overreaction, quickly polarizing opinions.
And while these conditions may seem scary to many, they are quite logical in this day and age. Both LyCI and Short LyCI represent unique tools, safeguarding and providing convenience to the ones brave enough to seize the opportunity at hand.