The company explained that the outcome of the product will be determined by how both Bitcoin (BTC) and its gold-backed token XAUT perform together.
Orbit Markets, a company that provides liquidity for cryptocurrencies to institutions, is launching a new type of investment product that combines Bitcoin and gold. They are partnering with execution broker PI Digital to introduce this innovative derivative offering.
This initiative is part of the recent efforts by crypto industry companies to offer reliable returns when there is uncertainty in the overall economy. Its goal is to provide investors with the opportunity to invest in gold and digital assets, which are known for maintaining their value over time.
OrBit Markets stated in a press release that this hybrid asset product is ideal for investors who are familiar with traditional assets like gold and are now exploring digital assets for the first time.
According to the Singapore-based company, OrBit, the derivative product called XAUT is a token backed by gold and issued by Tether. When the product reaches its maturity date, it can be settled in either USDT (Tether), XAUT, or bitcoin, depending on the choice made by OrBit.
OrBit mentioned in their statement that traditional financial service firms often provide hybrid products that combine different types of assets, such as stocks and commodities.
The company mentioned that there is an increasing number of investors who expect a continuous rise in the value of these two “safe haven” assets. This anticipation has grown due to concerns about the U.S. central bank’s strict monetary policy and the resulting instability in the banking sector.
OrBit explained that their product provides investors with a two-in-one option for both BTC and XAUT. This means investors can take different positions on bitcoin and the XAU token, such as predicting increases or decreases in returns for either asset, or even scenarios where one asset’s returns go up while the other’s go down. It allows for a range of investment strategies based on different views and possibilities.
OrBit, the liquidity provider, mentioned that they offer a “worst-of-put option” which ensures that if any of the underlying assets decrease in value, investors will be placed into the worst performing asset. On the other hand, if none of the assets fall, investors will receive a higher yield on their investment. This feature aims to provide a level of protection while also offering the potential for increased returns.
In March, a company called MEV Capital, which focuses on decentralized finance (DeFi) asset management, utilized options contracts provided by OrBit markets. They used these contracts to protect the positions of liquidity providers and avoid losses in Uniswap (v3) liquidity pools. This helped ensure the security of their investments and prevent any potential negative impacts.
Pulkit Goyal, the Vice President of Trading at OrBit Markets, stated that their goal is to provide flexible solutions to their clients. He also mentioned that OrBit has plans to introduce more hybrid products specifically designed for institutional investors. Their aim is to cater to the unique needs and preferences of their clients and expand their product offerings in the future.
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