How to Profit From Bitcoin With Less Risk

Unless you first bought bitcoin in mid-August this year or after, it was easy to make money on the crypto. The digital token is up 291.6% year-to-date. Maybe easy is not the right word…but there were plenty of investors who just bought the coin and held on.

bitcoin price

Source: Coin Desk

One such investor was Warburton Global Macro Fund. The $20 million fund says it made a tidy profit trading bitcoin. However, unlike many other investors, it did so while minimising risks.  The fund traded the spread between bitcoin prices in North America, Europe and Asia.

We got onto bitcoin quite early before the institutional guys got there and were able to pick up a spread between the different exchanges,’ Leon Warburton said. Over six weeks, the fund bought bitcoin in Europe and America, and then sold it in Asia where demand was higher.

The important factors in Warburton’s strategy are time and demand. And while demand continues to rage on, time could be a limiting factor as more and more people jump in.

The transaction costs have skyrocketed so unless you are willing to pay a large amount of money transfers can take hours through to days.

Because we were getting 6 to 8 per cent spreads we were prepared to pay a big premium to get our trades done at the speed of an email, but it’s just become so congested.

So what does he see for bitcoin’s future? Because prices are sentiment driven, Warburton doesn’t believe it will become a medium of exchange. It’s more likely to become a ‘quasi gold’.

Could Bitcoin Price Rise Higher?

It’s extremely hard to take a fundamental view on bitcoin, or any cryptocurrency for that matter. But of course it’s easy to speculate that bitcoin could rise higher from here. Imagine if investors could put money in a bitcoin exchange traded fund (ETF), or if it cannibalised some of the US$7 trillion gold market.

Either would see the crypto rise substantially. It’s a speculative view, but if it happens, wouldn’t you want to have some exposure to bitcoin?

To learn more about the secret world of bitcoin click here.


Härje Ronngard,

Junior Analyst, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

Money Morning Australia