Recently, the NFT-based Metaverse Projects continued to gain traction, with SAND, AXS, MANA, ENJ taking the lead. MEXC data shows that as of July 7, the spot products SAND, AXS, and MANA increased by 37.91%, 25.42%, 18.62% in 24 hours, while SAND3L, AXS3L, MANA3L, ENJ3L increased by 102.46%, 77.43%, 56.71%, 38.27% in 24 hours as MEXC leveraged ETF amplifies market movement profits.
In the cryptocurrency market, compared with the futures products, although the leveraged ETFs were launched at a later date, it has become a relatively mature product among the three major cryptocurrency derivatives (futures, margin, and leveraged ETF).
Generally speaking, leveraged ETF is a perpetual leveraged product that amplifies the changes of a spot product according to a specific multiple. For example, as shown in the above data, when the spot product SAND rises by 1%, SAND3L will increase by 3%, and vice versa.
Leveraged ETFs are common in traditional derivatives markets, such as the “ProShares UltraPro QQQ” ETF (NASDAQ: TQQQ) and the “ProShares UltraPro Short QQQ” ETF (NASDAQ: SQQQ).
Compared to leverage or futures products, MEXC leveraged ETF’s leverage has a smaller leverage multiple, with no forced liquidation price, a compound interest effect, and is suitable for market trends.
Compared to similar leveraged ETF products, MEXC leveraged ETFs include 3X, 4X, 5X, different transaction cryptocurrencies, different multiples, such as BTC leveraged ETFs like BTC3L/3S, BTC4L/4S, BTC5L/5S. So, in terms of products, this gives users with different preferences various choices.
During market trends, the performance and advantages of leveraged ETF will be very obvious. Holding leveraged ETF will generate compound interest returns. The floating profits positions will be automatically transferred to open positions at 00:00 each day, creating a compound interest effect for the investments. However, in the case of large two-way shocks (such as a large rise followed by a large fall), the leveraged ETF will generate more wear and tear. Currently, it will always produce a certain loss due to this wear and tear.
Another feature of MEXC Leveraged ETF is the rebalance mechanism. Rebalancing is a kind of risk control measure taken from traditional financial markets. Rebalancing is the most important feature of ETF derivatives. Due to the existing rebalancing mechanism, leveraged ETF has unique characteristics:
1. No deposit is required and there are no rules for liquidation.
2. Compound interest effect. Automatically transfers floating profit positions to open positions at 00:00 each day, creating a compound interest effect for the investment have.
Rebalance is divided into periodic rebalance and non-periodic rebalance.
Periodic rebalancing refers to rebalancing at 00:00 each day to maintain the leverage of the ETF. When rebalancing, holders are charged specific rates.
Non-periodic rebalancing. If the fluctuation of the underlying spot asset exceeds a certain threshold, the corresponding user will be charged a rebalancing fee.
For example, when the BTC spot price is 10,000 USDT, the BTC3L and BTC3S come online. The BTC3L and BTC3S are periodically rebalanced, and the BTC spot price is pegged to 10,000 USDT.
When the BTC spot price rises or falls by more than 15%, that is, when the BTC spot price reaches 11,500 USDT or 8,500 USDT, the non-periodic rebalancing will trigger.
MEXC Leveraged ETF products came online in the fourth quarter of 2019 after completing the research and development stages. Up to now, they have covered nearly hundreds of crypto assets in many fields such as mainstream cryptocurrency, Polkadot ecosystem, DeFi ecosystem, NFT ecosystem, privacy-based concepts, Layer2, etc. Leveraged ETF products have the most variety of transactions across the network after spot products, with its daily transaction volume once exceeding $400 million USD.
The advantage of leveraged ETF transactions is that: there are hot and cold periods in any sector of the crypto market, and there are many projects with better market quality. If you accidentally miss one of them, there are many other projects to choose from.
For many traders who like to leverage ETF transactions in the current market, it is only necessary to focus on which leveraged ETF pairs are already on the trading platform and which pairs are rising suddenly because, in addition to supporting ETF transactions of mainstream assets, assets that perform well in the market will quickly be added to the ETF.
Looking back on the entire cryptocurrency market from 2020 to now, during this process of going from a bear market to a bull market, hundreds of cryptocurrencies have been rising in different sectors, which not only benefits many spot investors but also allows people who prefer to leverage ETFs to make relatively good profits in different sectors.
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