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The past week has been quite dynamic across all markets and asset classes but as usual with great volatility comes great opportunity. At Nexo, we have designed products to help you continue growing your wealth in any market condition and to suit your worldview.
Еarn 8% Interest on Your Cash and Stablecoins
If you subscribe to the motto “cash is king” in crises, you might be looking for the best option to enhance the yield on your hard-earned cash while avoiding exposure to the price fluctuation of the alternative asset classes.
All funds are asset-backed by Nexo’s portfolio of 200–500% overcollateralized crypto credit lines
The Global Macro Situation
As the worldwide COVID 19 crisis is unfolding, the economic damages are inevitable: Goldman Sachs and Morgan Stanley are expecting a contraction of 24% and 30% respectively in US gross domestic product during the second quarter of 2020. Ray Dalio, founder of Bridgewater Associates, estimates that the financial losses for US companies from the coronavirus-induced slump could be about $4 trillion.
In an attempt to stop the economic meltdown and prevent a collapse of the legacy financial system, central banks are aggressively injecting liquidity in the economies all over the world. In fact, just a few hours ago the Federal Reserve announced unprecedented quantitative easing, including buying unlimited amounts of bonds in order to keep the borrowing costs low.
The result is even more depressed yields on government and corporate bonds, respectively pushing interest rates on traditional banking deposits further down.
The 8% interest rate on Nexo’s ‘Earn Interest’ product is in a different league compared to similar services offered by high-street banks and alternative lenders.
Moreover, with Nexo, you do nоt have to worry about risk-taking behavior, levels of unserved debts or limits on deposit protections. Unlike the incumbent banking institutions, our balance sheet is overcollateralized with digital assets.
We hold 200–500% of the face value of our assets as collateral, making Nexo extremely resilient to severe stress across the financial system. With traditional banks, your downside risk protection is an FDIC insurance of up to $250,000 in the US and €100,000 with the DGS in Europe. In contrast, Nexo does not treat large accounts differently as every dollar lent out is substantially collateralized by liquid assets, making Nexo an excellent option to store large amounts of wealth even in fat-tail risk environments.
Ultimately, the return Nexo offers proves to be far better than the current yields on government-denominated bonds. Moreover, it is comparable to what the equity markets delivered during the past 10-year bull run, without exposing clients to the extra risks and uncertainties associated with stock ownership.
Grow Your Crypto Wealth with the Instant Crypto Credit LinesTM
On the other side of the spectrum, you might see the recent market capitulation as an overreaction to short-lived fears of a global pandemic and prolonged economic recession. Еquities have experienced historic losses with almost 30% of the Dow Jones Industrial Average being wiped out over the past month.
These unprecedented market conditions led to a price decline even in investments perceived as safe-havens like gold and crypto-assets. A potential explanation of the phenomenon is a fire sale of high-quality liquid holdings to cover margin calls across the board.
The selling pressure in the digital assets space is also exacerbated by the segmented nature of the secondary market trading venues, resulting in flash crashes like the one on March 12th. Precisely episodes like this might present excellent buying opportunities for patient investors with hard cash on hand.
With this in mind now might be the perfect moment to use Nexo’s tax-efficient Instant Crypto Credit Lines to get some extra liquidity and seize this timely opportunity for investment:
The best borrowing rates starting from 5.9% APR only on what you actually use