There has been a lot of discussion about what the world of money will look like following the COVID-19 pandemic of 2020. A few trends have already emerged in this regard: there is more emphasis on remote transactions and fintech, certain industries have proven less profitable to invest in, and the landscape is favoring cryptocurrency more than ever. Between the influx of traffic to the cryptocurrency sector and the explosion of DeFi, it seems that cryptocurrency is going to take center stage in the years following the pandemic.
What Is Drawing People To Crypto?
Cryptocurrency already had a healthy influx of both individual and institutional support prior to the COVID-19 outbreak, but the months following lockdown measures have seen a significant spike in crypto-related interest. For many people, this is due to the desire of having more control over their assets. Despite new crypto interest, not everything has been positive. Sectors such as travel and tourism have been hit hard, with many companies expected to go out of business in the coming years as a result. Naturally, this caused the stock market to react with high volatility. With their investments in jeopardy, investors have turned to digital assets to hedge their bets in the event of another decline. This was further bolstered by the fact that digital assets like cryptocurrencies have fewer entry barriers than traditional asset classes.
New Investment Options Within The Blockchain Industry
One of the more interesting sectors of the blockchain industry has been lending and the chance to stake, lend, and borrow assets at interest rates that can be very attractive for both sides of the equation. Back in March 2020, Babel Finance, a major cryptocurrency financial institution in Asia, announced that it had reached $380 million in outstanding loans. At the time, Babel had claimed that this development was due to trading firms, institutional lending desks, and Chinese miners who turned to crypto lending firms in order to pay for mining costs and offer their future mined tokens as collateral.
Babel Finance’s newly formed private banking services, called Babel PRIVATE, were embraced by high-net-worth individuals which led to investments of up to $50 million in USDT tokens from these clients. The crypto market, primed for even more investment than ever before, is now providing ample opportunity for new investment products. These were not the only new investment products available from Babel in 2020. On September 22 the company announced the launch of two Bitcoin open-ended Fund Investment products – BTC Ratchet-Snowball 001 and BTC Simons 001. Both products are open to subscription now and enable crypto investors to have an investment-friendly experience that was previously only available to traditional stocks and funds.
Details About The New Offering
According to Babel, the product will have an initial size of 500 bitcoin each. The subscription limit will also be one bitcoin and the net asset value of the products will be updated every Friday of the month. However, the product is only to Babel PRIVATE clients who will enjoy zero purchasing fees and redemption fees during the promotional period. This offering, while innovative, appears to borrow some features from the traditional financial market such as its ‘snowball structure’, which is a popular investment strategy in the larger market. It has also been described as suitable for investors who have a “long-term bullish” view.
Crypto and Traditional Unite
These recent developments show that traditional financial services and crypto services can work side-by-side and in some cases, cryptocurrency offerings can improve existing traditional products. For example, Babel’s BTC Ratchet-Snowball 001 Fund is an improvement to the traditional concept of a Snowball structure. It aims to maximize returns with a carefully added layer of security that can withstand major price changes – even amid a volatile market like the one we’re in– so that heavy losses won’t occur.
According to Babel Finance’s historical data from Feb 28-Sep 11, its BTC Ratchet-Snowball 001 Fund achieved more than a 20% annualized rate of return. As consumers are expanding their options more and more to include cryptocurrency offerings, the larger market will have to adapt and embrace it, making way for a more pro-crypto financial future.