What is Pionex BTC2L

In a bullish market, if you want to have a simple method to beat holding Bitcoin strategy, then Pionex BTC2L is one of your best choice.

The full name of Pionex BTC2L is Bitcoin 2x Long leveraged token. It has no liquidation risk while the downward rebalancing risk is low. As a result, you can expect a good return on BTC2L in bullish trend.

If you don't know what is leveraged token yet, you can click Tutorial on Pionex's leveraged token. 

To better understand BTC2L, let's assume BTC2L starts trading from June 03, 2020. Then we can see that the backtest result of BTC and BTC2L is:

The yearly return of BTC2L is about 5 times higher than Bitcoin, 
while the maxdrawdown of BTC2L is less than 2 times the maxdrawdown of BTC.

BTC2L Rebalance history：

We can see that Pionex BTC2L did not have a downward rebalance in the rising market from June 2020 to March 2021, that is, there was no wrong-side rebalance, which made the return of holding BTC2L much higher than BTC, and the risk was relatively controllable. This excellent rebalance is because BTC2L uses the optimized leverage ratio range of 1.6 ~ 3.5, which can better avoid the wrong-side adjustment caused by dip of Bitcoin during the bull market, and is more suitable for long-term holding or wide-range grid.

When will Pionex BTC2L rebalance？

The core difference between Pionex leveraged tokens and traditional leveraged tokens lies in the difference of rebalance mechanism. The essence of rebalance is to return the leverage ratio "disturbed" by price fluctuation back to the original leverage ratio, which is 2 times.

The rebalance mechanism of 2L leveraged token is when the leverage floats within 1.6-3.5 times, the position is not adjusted, and when the lever exceeds 1.6 or 3.5, the rebalance mechanism is triggered and the leverage ratio is adjusted back to 2 times.

Assuming that the spot price of BTC is 10,000 USDT and the spot price at the time of warehouse adjustment is X, then:

The trigger condition of 2L lever token is when 2x/(2x-10000) = 1.6 or 2x/(2x-10000) = 3.5, x= 13333.33 (+33.33%) or x=7000 (-30%)

That is, after the previous rebalance of BTC2L, BTC rose by 33.33% and triggered the BTC2L upward rebalance, while the BTC fell by 30% and triggered the BTC2L downward rebalance. As the BTC pullback during the bull market generally does not exceed 30%, BTC2L can well avoid the risk of downward rebalance. Because when the BTC pullback reaches 40%, it is quite likely to be the end of the bull market. So BTC2L's downward rebalance can be used as one of the judgment indicators for the end of the bull market, and can also be used as an important basis for closing positions.

How does BTC2L charge? Leveraged tokens include administrative fees and handling fees The management fee of Pionex net leveraged tokens is the same as that of traditional leveraged tokens, and the calculation method has not changed: the position fee is directly reflected in the price of tokens, and is settled once a day at 0 o'clock in Singapore time (UTC+8), deducting 0.03% of the fee each time. In other words, the daily price of 0 points will drop by 0.03%.

How does BTC2L charge?

Leveraged tokens include funding fees and commission fees.

The funding fee is directly deducted in the leveraged token price, and the funding fee is 0.03% every day. That means the price of the leveraged token will decrease 0.03% everyday at 0:00 UTC.

The commission fee for general Pionex user is 0.1% but 0.05% for VIP and SVIP.

FAQ

What is the corresponding relationship between BTC2L's price and BTC's price?

Assumption 1: BTC's pullback in the rising process did not trigger BTC2L's falling position adjustment; Assumption 2: When BTC2L is issued, the price of BTC is 56,000 USDT;

Then

Note: The above calculations are theoretical values without considering various expenses, and the actual result may deviate due to commission fees, funding fees, etc.

We can see that BTC2L can obtain more than 2 times the spot increase due to 
the existence of upward rebalance.

A Case of ultra-wide range BTC2L Grid Bot Setting

Assuming that the price of BTC2L is 1 USDT at the time of initial offering, Jack expects BTC to rise by 100% ~ 200%. According to the price corresponding table between BTC and BTC2L, it is found that the price of BTC2L will rise to 3.47 ~ 7.09. At the same time, Jack judged that the max drawdown of BTC would be  30% at most, and hoped to stop loss when it exceeded 30%.

Then Jack can set the grid bot parameters as follows: 

0.4~8, stop loss 0.4, stop gain 7,150 grids and arithmetic.

A Case of small-range BTC2L grid bot setting

Assuming that the price of BTC2L is 1 USDT while the price of BTC is 56,000 USDT, Paul expected BTC bump between 53,000 USDT and 60,000 USDT. By calculation, Paul found that the BTC2L should bump between 0.9 USDT and 1.16 USDT when BTC bumps between 53,000 USDT and 60,000 USDT.

Then Paul can set the grid bot parameters as follows:

0.9-1.16, 40 grids and arithmetic

How to find BTC2L? 

Search BTC2L under the "Markets" tab.

When is it not suitable to use BTC2L?

Pionex BTC2L is a leveraged token designed for bullish market. If the current market turns bearish, BTC2L will not perform well.