I will be managing the Bull Bear Bitcoin Set (symbol: BBB) . Much like an actively managed ETF, it switches between Bitcoin and Cash. There are currently zero (0%) fees*. It is ‘non-custodial’, so you own the actual underlying assets .
How to follow the strategy/ buy a SET?
Visit the Bull Bear Bitcoin Set at TokenSets.com .
1) Login with your phone number, an email or MetaMask to connect to TokenSets.
2) Select the Set and amount to buy (you will need ETH, USDC or DAI).
3) Confirm and track the Set in the account page.
What is the BBB Set and the Bull Bear Bitcoin Strategy
- The BBB Set follows the Bull Bear Bitcoin strategy and allocates to either cash or to Bitcoin.
- Most of the time (historically 67% of the time) it stays in cash which will pay interest of around 4-6% (*coming soon).
- When a bull run is detected the strategy will participate and ‘ride it’. If the Bull run does not work out the strategy will go back to cash.
- Please read the f.a.q and the whitepaper for the strategy.
What is the advantage of following the strategy?
The main advantage is controlling downside risk. Compared to holding Bitcoin the strategy has cut risk to less than half, in backtests. You also get rules-based entries and exits so that will remove your emotional decision process on when to enter or exit your bitcoin position. When in cash, the cash will earn interest via the Compound protocol (coming soon).
What are the risks of the BBB Strategy
The strategy is meant to catch bullish moves of Bitcoin while controlling the downside risk. If Bitcoin never enters another bullish leg, neither will the strategy. If Bitcoin keeps going sideways and down, the strategy will accumulate small losses from entering and exiting.
This may be a good strategy for you if you plan to hold Bitcoin anyways but you are afraid of entering and exiting at the wrong time or you are not willing to sit by a 70%+ loss of capital.
What is a SET?
The SET is much like an ETF or mutual fund but for digital assets. Like an ETF (or fund) it can hold other digital assets (for example 50% Bitcoin and 50% Ethereum) but it can also be actively managed. The manager can be a person or a set of rules (for example Buy Bitcoin when price > it’s 20 Day moving average), You can learn more about Sets here.
What are the advantages of a SET
- Much like ETFs in traditional finance, Sets allow you to invest in multiple crypto-assets, baskets, rules-based strategies or manager-based portfolios. You can buy them, sell them or even keep them in your own wallet.
- They are non-custodial, meaning you own the underlying assets**.
- Verified Security, powered by audited code.
Advantages compared to parking assets on a centralised exchange ( Coinbase , Gemini, Binance, etc) and trading the strategy yourself :
- By buying a Set, you own the keys to the underlying assets. On a centralized exchange, the exchange owns the keys.
- By keeping funds and trading on an exchange, you run the risk that it gets hacked.
- A Set is ‘hands-free’. Set and forget. No buying and selling BTC or depositing USDC to Compound.
- No lengthy KYC or sharing of sensitive documents. Just use your Ethereum wallet or sign in with an email.
**If you hold an ETF like GLD, you are not really holding gold bars. You rely and trust the issuer to redeem your ETF for what it is worth. When you hold a Set, you are the owner of smart contracts that own the underlying assets, something that is ‘set-in-stone’ in the Ethereum blockchain. If the ‘issuer’, TokenSets, were to go under and disappear you could retrieve your assets using your own wallet.
What are the disadvantages and risks
There are the standard financial risks: Loss of capital, past results do not guarantee future results, etc. There is also the risk of crypto-currencies losing all their value and going to zero.
Now, compared to the more secure scenario of holding Bitcoin in cold-storage (offline) there are additional risks in:
- Although, the smart contracts of TokenSets have been audited twice, there is still a chance of an unseen vulnerability that could be exploited.
- The underlying is not Bitcoin itself but WBTC (wrapped BTC) so it relies on the WBTC –> BTC smart contract.
- The USDC is backed by Coinbase which is a centralized financial entity. As such, it could fail, much like Citibank or Bank of America could…
- The USDC is locked in Compound to earn interest (*when available). This process relies on Compound’s smart contracts to lock/unlock USDC.
- Some other technical risk I am not even aware.
Why should you try a SET
I think having easily accessible, rules-based strategies that we can just buy and sell is great. Being able to own it and keep them in my own wallet is a dream!
Disclaimer: Please only invest money you can afford to loose. Past performance does not guarantee future performance. None of this constitutes financial advice that is related your own personal circumstances.