How to Hedge your Cryptocurrency Portfolio with Abra
Do one of these scenarios apply to you?
- You’ve generated significant gains in bitcoin that you’d like to temporarily lock in
- You’ve been paid in bitcoin (via salary, ICO, or an online marketplace) and would like to lock in the USD value of your bitcoin
- You sense the market is falling and you’d like to temporarily move your bitcoin to USD
- You want to temporarily convert bitcoin to Dollars without a bank account and with no ID
With Abra, you can easily exchange your bitcoin into USD (or PHP, EUR, CHF, etc), and then back into BTC or ETH when you’re ready. When you store USD on the Abra app, you can also withdraw those funds to a connected bank account (available only in the U.S. and Philippines and with specific limits on withdrawal amounts).
Here is an example* (with 1 BTC = $10,000, to keep it simple):
- Download Abra and complete sign up (make sure to write down your recovery phrase!)
- Transfer 1 bitcoin to Abra from an external wallet. Your total Abra portfolio balance is now $10,000.
- You instantly exchange 1 BTC into $10,000 USD (or any of the 50+ fiat currencies Abra supports) because you want to protect against a BTC market downturn. Your total Abra portfolio balance is $10,000.
THE PRICE OF BITCOIN DECREASES TO 1 BTC = $5,000
- Your Abra portfolio balance is still $10,000, because you converted your funds to USD
- You feel there is a good buying opportunity because of the dip, so you exchange your USD back into BTC. Your Abra portfolio balance is now worth 2 BTC, because 1 BTC = $5,000.
THE PRICE OF BITCOIN INCREASES TO 1 BTC = $12,000
- Your Abra portfolio balance is now worth $24,000 (2 BTC x $12,000). By converting into USD and then back into BTC at a later date, you now have $12,000 more than if you had just held BTC. At this point, you may decide to lock in the appreciation again by moving funds to USD, or diversify into ETH, for example.
Unlike most exchanges, you do not need to provide any form of identification to store USD and BTC on Abra** as we do not hold your bitcoin or USD funds, they are stored directly on your Abra App. Even your USD balance, which is similar to Tether (but better!), is based on Abra’s digital currency contracts. With Abra, you are in control of your money at all times. You can learn more on our website about why we believe this security model is superior.
Feel free to comment below and make sure your Abra app is updated to the latest version.
* Example based on the current price of 1 BTC = $10,000 on 2/23/18. Excludes increases/decreases in the spread and/or mining fees.
** We may require identification for deposits and withdrawals via bank or credit card, when applicable
Disclaimer: Abra is not a financial advisor. This post is not intended to be financial advice, it is for information purposes only. Also, Abra makes money on exchange currency transactions within the Abra app.