Orbit Markets, an institutional liquidity provider of crypto options, is rolling out the first bitcoin and gold hybrid-focused derivative product with execution broker PI Digital.
The initiative is among the latest developments among crypto industry firms to provide steady returns during periods of macroeconomic uncertainty. It aims to give investors exposure to gold and digital assets, two assets that hold their value.
“This hybrid asset product is a perfect fit for investors that have experience in traditional assets such as gold and are now starting to dip their toes into digital assets,” OrBit Markets said in a press release.
The derivative product, XAUT, is a gold-backed token issued by Tether. At maturity, the product will be settled in either USDT, XAUT or bitcoin as designated by OrBit, the Singapore-based company said.
In its statement, OrBit noted that traditional financial service firms (TraFi) commonly offer hybrid products, including those combining stocks and commodity assets.
The company said that investors “anticipating a sustained rally” in these two “safe haven” assets has risen amid growing concerns about the U.S. central bank’s hawkish monetary policy and resulting turmoil in the banking sector.
“It’s a dual option on both BTC and XAUT,” OrBit said, adding that investors could cover “various sophisticated views” on bitcoin and the XAU token, including increases or decreases in returns for both, or if returns for one of the assets climbs but fall for the other.
A “worst-of-put option” will also ensure, for example, that “if any underlying (asset) falls, the investors will be “put” into the worst performer. Otherwise, the investor will receive an enhanced yield,” the liquidity provider said.
In March, DeFi-focused asset management company MEV Capital used OrBit markets-issued options contracts to hedge liquidity providers’ positions and prevent losses in Uniswap (v3) liquidity pools.
“OrBit aims to offer flexible solutions to our counterparties,” Pulkit Goyal, OrBit Markets VP of Trading adding that “OrBit plans to launch further hybrid products dedicated to institutional investors.”
Edited by James Rubin.
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