Crypto structured products’ potentials
THE Philippines has emerged as a leader in global crypto adoption in recent years, boasting one of the highest crypto ownership rates in the world. The Philippines also tops the list when it comes to grassroots adoption of cryptocurrency, indicating a growing population of retail investors.
As mainstream adoption grows, the country’s crypto market has also experienced increasing complexity, institutional participation, and an emphasis on compliance and risk management.
For example, as a country with the world’s largest remittance markets, the Philippines is home to several industry-leading onramp platforms, such as Coins. ph, which have led to the transformation and modernization of the country’s financial industry in recent years. The growing adoption and popularity of crypto has also led to digital assets being integrated on a national level, with the Bangko Sentral ng Pilipinas (BSP) announcing its plans to launch a wholesale central bank digital currency (CBDC) project late last year.
Crypto structured products are at the forefront of revolutionizing the investment landscape for retail investors. While structured products are not a new concept in traditional finance, their application in the world of cryptocurrencies is a gamechanger. These financial instruments offer diversification, risk management and tailored investment strategies, providing retail investors with a unique opportunity to tap into the tremendous growth potential of the crypto market. With their accessibility, transparency and structured exit strategies, crypto structured products offer both convenience and security, making them a transformative force in how retail investors participate in the crypto market.
The ins and outs
Structured products represent financial instruments crafted to provide a balance between risk and reward across diverse market conditions. As versatile financial tools, they empower investors to tailor their investment approach to their individual risk tolerance, investment objectives, or market perspectives.
However, while conventional structured products revolve around traditional financial assets, crypto structured products are tied to digital assets within the still-nascent crypto ecosystem, such as BTC, ETH, or USDT to fashion the final product.
The allure of crypto structured products lies in their customizable nature, which fosters flexible investment strategies. Broadly, these products extend three main benefits to retail investors: portfolio diversification, the potential for higher yields, and effective risk management.
Diversification of portfolio. A standout feature of crypto structured products is their capacity to diversify investment portfolios. Conventional investment avenues offer limited diversification prospects, especially for those seeking to venture beyond traditional asset classes. Crypto structured products open up new horizons for retail investors by granting access to novel markets and simplifying participation in the cryptocurrency sphere, thus facilitating broader portfolio diversification and potentially higher returns.
Potential for high returns. Another enticing aspect of investing in crypto structured products is the potential for substantial yields. Investors could generate significantly higher yields and returns due to the heightened volatility of the cryptocurrency market and the ability to craft structured products to harness market swings.
Risk management. That said, investing in the crypto market is not devoid of risks. The same volatility that creates opportunities for high returns also poses its risks. This is where the concept of risk management comes into play. Crypto structured products are designed with mechanisms that effectively manage risk exposure. By tailoring the product structure to their risk tolerance and investment goals, investors could mitigate potential losses.
Choosing the right structured products
A crucial feature of crypto structured products is their ability to customize products to fit investors’ perceptions of the market and profit from it. However, achieving this requires investors to assess their risk appetites and market perceptions meticulously.
There are two main avenues to consider in structured products:
Passive wealth accumulation. Investors with passive wealth accumulation in mind typically have a lower risk appetite. Because of this, it is more beneficial to opt for structured products that prioritize downside protection and principal protection, such as the Shark Fin — one of the most popular wealth management products now available on leading exchanges like Bybit and KuCoin.
Active speculation. At the higher end of the risk spectrum, structured products with leveraged returns could offer opportunities to investors looking to amplify their market gains. In this case, the Future Plus or Twin Win becomes the optimal choice.
Similar to any other financial instrument, crypto structured products come with their set of advantages and disadvantages.
For retail investors, comprehending these factors and collaborating with an experienced advisor could help harness the complete potential of these innovative financial tools.
While the market size of crypto structured products remains relatively small compared to their traditional finance (TradFi) counterparts, they have garnered significant traction in recent years. This not only underscores the potential and significance of these tools in amplifying returns, but also provides passive investors with a means to reduce volatility risks.
The adoption of structured products is expected to persist as crypto continues to integrate further into financial markets. For investors in the Philippines — whether new or seasoned — embracing these innovative products could pave the way for greater access to the lucrative cryptocurrency market, as well as a brighter, more accessible financial future for the Philippines.