After 9 months on the job, without a single minute of rest, the Bitconnect trading bot just informed its employer that it will be taking the next month off!
If you don't use Bitconnect, your surely have heard about it. Bitconnect allows you to lend your BTCC to a trading bot, that has been earning about 1%/day, or an annual return of 365%.
The system works great if Bitcoin is going up, because you deposit BTC, get BTCC in return, and then lend the BTCC to the bot. The bot doesn't really need to do anything except watch BTC go up.
But what if Bitcoin goes down? We will find out shortly!
For comparison, take a look at whaleclub.co. This platform allows you to go short or long on Bitcoin. You can also leverage your position up to 20x your initial investment. The problem is, if you are short the effects are accelerated and your return is reduced because your payback/payout is in bitcoin. Think of it this way. Lets say you are short on Bitcoin. You think it will drop to $500. You bet 1 Bitcoin at $4000, and leverage it 5x. So for every $1 Bitcoin drops, you don't get $5, you get .00025 BTC x 5, or .00125 Bitcoin. Once bitcoin reaches $500, you have .00125 x $3500(the amount Bitcoin has dropped) or 4.375 Bitcoin.
Great! You now have 4.375 Bitcoin. Bad! It's only worth about $2200. You actually lost $1800 even though you predicted correctly.
Something similar could happen with BTCC. If Bitcoin goes into a trading range, or long term downtrend, Bitconnect will start losing money, and have trouble paying back the daily interest.
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