In an innovative move, Orbit Markets, a renowned institutional liquidity provider of crypto options, has partnered with execution broker PI Digital to introduce the first bitcoin and gold hybrid derivative product. This collaboration is part of numerous efforts by firms in the crypto industry to ensure consistent returns during periods of macroeconomic uncertainty.
The hybrid asset product aims to provide investors exposure to both gold and digital assets, two assets known to hold their value. As a perfect fit for those with experience in traditional assets like gold and are now starting to explore digital assets, this hybrid product is an exciting development.
The derivative product, XAUT, is a gold-backed token issued by Tether. This Singapore-based company, Orbit, will settle the product at maturity in either USDT, XAUT, or bitcoin. Orbit points out that hybrid products are commonly offered by traditional financial service firms (TraFi), including combinations of stocks and commodity assets.
This new product development comes amid increasing concerns about the U.S. central bank’s hawkish monetary policy and the resulting chaos in the banking sector. Investors are anticipating sustained rallies in the said “safe haven” assets as a result. Orbit’s statement illustrates the dual option on both BTC and XAUT, allowing investors to cover various sophisticated views on bitcoin and the XAU token, such as increases or decreases in returns for both, or climbing returns for one of the assets while falling for the other.
Moreover, a “worst-of-put option” has been included to ensure that, for example, if any underlying asset falls, the investors will be “put” into the worst performer. Otherwise, the investor will receive an enhanced yield. Orbit Markets’ effort signals its commitment to offering flexible solutions to counterparties. In a statement, Pulkit Goyal, Orbit Markets VP of Trading, revealed that the company plans to launch more hybrid products dedicated to institutional investors.
This initiative follows a move in March by DeFi-focused asset management company MEV Capital, which utilized Orbit Markets-issued options contracts for hedging liquidity providers’ positions and avoiding losses in Uniswap (v3) liquidity pools.
As the crypto industry’s landscape continues to evolve, hybrid products like this embrace the potential of digital assets and traditional commodities, showcasing the promising future of finance.