Everyone is talking about how blockchain and digital currency markets provide financial tools for traders and investors, especially in decentralized finance, which is called DeFi. Everyone talks about the blockchain and the digital currency market. However, there are some interesting other models that are familiar to most traders. One of them is ETF tokens.

These tokens are adjustments to the beloved Exchange Fund in traditional finance. Initially, ETFs consisted of an asset that tracked the price of the underlying asset as a way to obtain it without actually owning the underlying asset. They are usually used to buy a basket of assets to track an index or an entire industry.

For example, the S&P 500 is one of the most popular ETF indexes, which track the largest companies in the US A505 by market capitalization. It is used by investors as an effective way to enter the entire US market.

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Leverage effect for ETF trading

On digital currency trading platforms like Wisebitcoin , ETFs can be used as a tool to gain exposure to specific crypto assets without owning them. More importantly, you can also add leverage. In other words, the tokens purchased by the ETF on the exchange not only trace the underlying assets, but also expand the benefits or losses.

Traditional ETFs track the security of their basic contracts on a one-to-one basis, and leveraged ETF tokens can be positioned at a ratio of 3:1. Here, the amount of benefit depends on the size of the leverage. Take, for example, a leveraged ETF that invests in S&P stocks. This tool uses borrowed funds to convert 1% of revenue into 3%. The same principle applies when using leveraged ETF tokens. A 10% increase in the price of Bitcoin means that token holders can get a 30% return.

Another option is to use leveraged ETFs to reverse short positions. In other words, when the market turns bearish, leveraged reverse ETFs can take advantage of the decline in their underlying assets.

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Pros and cons that you should know

Leveraged ETFs are high-risk and high-return investments. Therefore, leveraged ETF tokens have become a simple and common method for professional traders to profit from short-term price fluctuations in the digital currency market. Usually use the short-term profits of its underlying assets and only hold ETFs for one to two days.

Advantages of leveraged ETFs
  • Significant development is expected
  • Allow multiple indices to be traded
  • Inverse leveraged ETFs can profit from falling markets
The lack of leveraged ETFs
  • May suffer greater losses
  • The handling fee for investing in leveraged ETFs may be relatively high
  • Not as a long-term investment

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Trading ETF leveraged products

Compared with traditional investment, leveraged ETF tokens can become a simple and competitive alternative investment tool. To find out about these financial instruments, you can use the Wisebitcoin platform and trading tools to buy and sell ET tokens.

As a digital currency trading cloud service system, Wisebitcoin provides the best choice for professional traders, providing ETF tokens with 3 times leverage for short-term and long-term investors. Including all the most popular assets in the digital currency market, such as BTC, ETH, LTC, UNI, and DOT.

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