Cryptocurrencies are currently making a massive push into the mainstream financial space. As it does so, many billionaire investors are starting to take notice, with others innovating as a result. One UK brokerage, in particular, going by the name of Marex Spectron, now boasts a new offering to the wealthy.
This offering provides a safer way to play in the dangerous Bitcoin markets, but there’s always a price to these things. In this case, the investors buying into this offering won’t be able to benefit from the monumental gains the world’s first cryptocurrency is known for
Limiting The Losses (As Well As The Gains)
Marex Spectron Group, based in London, is offering investors an autocallable, a structured product that holds a minimum investment amount of $200,000 according to the term sheet. Should the cryptocurrency stay stable for some time, it’s claimed by Marex that investors in this autocallable will be capable of gaining as much as 70% in returns by way of monthly coupons.
The big price for this, however, will come if Bitcoin (BTC) keeps its meteoric course in value increase. Should Bitcoin’s price see a massive increase, these investors will only get their capital back early, coupons included.
The upside to this, however, is that these investors wouldn’t lose as much should Bitcoin see another catastrophic fall as it did back in 2018
Safety And Convenience Will Always Be Popular
Benn Eifert stands as the Chief Investment Officer at QVR Advisors, a hedge fund. In a public statement, Eifert denounced the concept of the autocallable. In his words, the entire idea seemed unintuitive, as the investor gives up all potential for dramatic upside in order to receive a 30% protection against downsides as well as getting a coupon.
Even so, Eifert made a note of how popular these kinds of structures are, due to their considerably reduced risks when investing in wildly volatile assets.
It was just this week when Marex Solutions started to market these Autocallables. It should be noted, however, that JRJ Group owns Marex Spectron, with Marex itself benign particularly active within the energy and commodity markets. JRJ Group itself stands as a private-equity firm, owned by the former bankers of Lehman Brothers: Roger Nagioff and Jeremy Isaacs.
Some Dark Footnotes
Autocallables might be popular, but it has its fair share of notoriety as well. Some two years ago, Natixis SA managed to lose $200 million in Korea-based products after the firm had mismanaged the risks regarding equity market turmoil.
Even so, the products are considered a staple within the structured product space, with retail investors, Asia being the most prominent of that, piling money into the space to seek a regular income.