How to Hedge your Cryptocurrency Portfolio with Abra
Updated March 2022.
Do one of these scenarios apply to you?
- You’ve generated gains in Bitcoin (BTC) 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 USD without a bank account.
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).
CAPTURING THE DOLLAR VALUE OF YOUR BITCOIN
Here is an example (with 1 BTC = $10,000, to keep our example simple):
- Download Abra and complete sign up (make sure to write down your recovery phrase!)
- Transfer 1 Bitcoin (BTC) 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 1 BITCOIN DECREASES TO $5,000
- Your Abra portfolio balance is still $10,000, because you converted your funds to USD.
- You feel the dip is a good buying opportunity 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 1 BITCOIN INCREASES TO $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 other cryptocurrenies; ETH, for example.
Your Bitcoin and USD funds are stored directly in your wallet on your Abra App. Your USD balance 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 to your funds being held on exchanges.)
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Disclaimer: Abra is not a financial advisor. This post is for information purposes and not intended to be financial advice. Abra makes money on exchange currency transactions within our app.
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Established in 2014, Abra is on a mission to create a simple and honest platform that enables millions of cryptocurrency holders to maximize the potential of their assets. Abra enables both individuals and businesses to safely and securely buy, trade, and borrow against cryptocurrencies – all in one place. Abra’s vision is an open, global financial system that is easily accessible to everyone.
Based in the United States, Abra is available in over 150 countries and makes it easy to convert between crypto and a wide variety of local fiat currencies. With over 2MM customers, $7B in transactions processed, and $1.5B in assets under management, Abra continues to grow rapidly. Abra is widely loved and trusted – in April 2022, pymnts.com reviewed and rated Abra amongst the top 5 most popular crypto wallets in the market. Abra is backed by top-tier investors such as American Express Ventures and First Round Capital.
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