1. Introduction
Bitrue ETF is a type of financial product offering leveraged exposure to the price movements of underlying assets. It provides a simplified way to trade with leverage, eliminating the need for collateralized assets or concerns about liquidation.
This tutorial will guide you through the features, pricing mechanisms, trading guidelines, and risks associated with ETFs.
2. Understanding ETF
2.1 What is an ETF?
An Exchange Traded Fund (ETF) is a financial product designed to track the daily performance of an underlying asset with a specific leverage multiple.
Examples:
XRP3L: 3x long XRP. If the price of XRP increases by 1%, the ETF’s net value rises by 3%.
XRP3S: 3x short XRP. If the price of XRP decreases by 1%, the ETF’s net value rises by 3%.
XRP1S: 1x short XRP. If the price of XRP decreases by 1%, the ETF’s net value rises by 1%.
2.2 Key Terms
Basket Position: The quantity of underlying assets held by the ETF.
Basket Loan: The amount of borrowed currency associated with the ETF.
Net Value: The ETF’s value, calculated as:
Net Value = (Basket Position x Underlying Asset Price) + Basket Loan
Example Calculation:
For XRP3L:
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Basket position = 3 XRP
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Underlying asset price = 100 USDT
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Basket loan = -200 USDT
Then:
Net Value = (3 x 100) - 200 = 100 USDT
2.3 Risk Factors
ETFs come with inherent risks, including:
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The possibility for net value to reach zero.
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Market risks such as volatility and slippage.
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High management fees and rebalancing costs.
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Possible removal from the platform under extreme conditions.
3. ETF Pricing and Leverage
3.1 Pricing Mechanism
The ETF's net value is influenced by the basket position, underlying asset price, and basket loan. Together, these determine the ETF’s current value.
3.2 Leverage Calculation
The actual leverage of an ETF is calculated using the formula:
ETF Leverage = (Basket Position x Underlying Asset Price) / Net Value
Example Calculation:
For XRP3L:
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Basket position = 3 XRP
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Underlying asset price = 100 USDT
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Net value = 100 USDT
Then:
Leverage = (3 x 100) / 100 = 3x
4. ETF Position Adjustments
4.1 Regular Position Adjustment
To maintain the target leverage, ETFs undergo daily rebalancing, ensuring the leverage resets to the agreed multiple at the start of each trading day.
4.2 Specific Position Adjustment
If an ETF’s actual leverage deviates significantly during the day, the platform will perform a temporary adjustment to restore the agreed leverage multiple.
5. Trading Guidelines
5.1 How to Trade ETFs on Bitrue
Access the ETF trading interface via the Trade tab on the Bitrue website or directly through the following link: 👉 Bitrue ETF Trading Interface.
If using the app:
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Tap the Market tab at the bottom.
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Switch the top tab to ETF or search directly for tokens like XRP3L.
Once on the trading interface, you'll find a list of leveraged tokens with key details such as:
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24-hour price change,
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Net Asset Value (NAV),
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Last traded price, and
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Actual leverage ratio.
These details can help you make informed trading decisions.
5.2 Identity Authentication
Due to local regulations, some users may face restrictions on ETF trading. For details, refer to the latest policies on our website.
5.3 Holding Limits
Users must ensure their total holdings (current + new purchases) do not exceed the maximum allowable limit.
5.4 Order Price Limits with Net Value
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Buy Orders: Cannot exceed 105% of the current net value.
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Example: If the net value is 10 USDT, the maximum buy price is 10.5 USDT.
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Sell Orders: Cannot go below 95% of the current net value.
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Example: If the net value is 10 USDT, the minimum sell price is 9.5 USDT.
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6. Risk Reminder
Trading ETFs involves significant risks, including:
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Net value reduction to zero.
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Market volatility and slippage.
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High fees and rebalancing algorithm front-running.
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Platform delisting under extreme conditions.
Always trade responsibly and ensure you understand the risks before participating in ETF trading.
7. Conclusion
ETFs provide an innovative way to engage in leveraged trading while reducing complexities. However, they carry inherent risks that traders must carefully consider.
For further clarification, consult Bitrue's support team or refer to additional educational resources. Trade wisely!