Invest leveraged in Bitcoin with Knock-Out Warrants Open End

Since its launch in 2009, Bitcoin has become a globally recognized investment instrument. As a decentralized cryptocurrency with a total supply limited to 21 million units, Bitcoin is often referred to as the digital equivalent of gold. These characteristics make Bitcoin interesting not only for long-term investors, but also for those who want to profit specifically from short-term price movements. Knock-out warrants can play to their strengths in precisely such strategies.

With Knock-Out Warrants Open End on Bitcoin, Vontobel provides leveraged access to the performance of the cryptocurrency without investors having to purchase Bitcoin directly or store it in wallets. Even with a comparatively small capital investment, investors can participate disproportionately in price movements and, depending on market expectations, bet on both rising prices (Call Knock-Out Warrants) and falling prices (Put Knock-Out Warrants).

The price of a knock-out warrant is essentially derived from the intrinsic value: the difference between the current Bitcoin price and the fixed strike price. The subscription ratio and the development of the exchange rate must also be taken into account, as the underlying asset (USD per 1 XBT) trades in a different currency than the knock-out warrant. The distance between the current price and the knock-out level is crucial - the smaller this distance, the higher the leverage and the higher the risk of a knock-out.

A key feature is the knock-out barrier. If this barrier is touched or breached, the product expires immediately. Investors must therefore be aware that a total loss of the capital invested is possible. However, there is no obligation to make additional payments.

The knock-out warrants on Bitcoin are designed as open-end products. The financing component is taken into account daily by adjusting the strike price.

Knock-out warrants are also suitable for hedging existing positions. Bitcoin exposures or portfolios with a crypto share can be partially hedged against short-term price declines with put knock-out warrants. The hedging effect is immediate and requires a comparatively low capital investment.

Knock-out warrants on Bitcoin are aimed at investors who actively follow market movements, want to exploit opportunities in a targeted manner and understand the specific risks of this product category. They therefore offer a flexible way of reacting to the dynamics of the Bitcoin market.

Vontobel already offers leveraged products on Bitcoin, such as Mini Futures on the Bitcoin Future. The key difference to the new product lies in the underlying asset: Bitcoin Futures are contracts whose price is directly dependent on the Bitcoin price, but does not always correspond exactly to it. In addition, futures have to be rolled regularly, i.e. expiring contracts are constantly replaced by new ones, which means that the underlying value of the Mini Futures changes regularly.

The new knock-out warrants, on the other hand, refer directly to the Bitcoin price in US dollars (USD per 1 XBT). The Knock-Out Warrants therefore reflect the performance of Bitcoin more directly than a Futures-based leveraged product.