What is Wirex Multiply?
Wirex Multiply allows you to use a portion of your assets as collateral to speculate on the future price movement (whether it will rise or fall) of a cryptocurrency. By setting specific parameters, you can amplify the value of the loan, which increases both the potential returns and the associated risks based on the price difference between your entry and exit points. It’s particularly appealing for those who want to benefit from both market upswings and downswings.
How Wirex Multiply Works
Begin by depositing funds as collateral. This collateral doesn't need to be in the same currency as the one you intend to trade. The maximum amount you can lose is limited to the funds you initially deposit.
Select a Trading Pair: Choose the currency you want to trade. This currency will form part of a trading pair, which is pegged to and compared with another currency.
Predict Market Movement: Decide whether you believe the price of the chosen asset will increase or decrease over time. If you anticipate a price increase, buy the asset at a lower price and plan to sell it at a higher price later. Conversely, if you expect a price decrease, sell the asset at a higher price and aim to repurchase it at a lower price.
Set a Multiplier: Choose how much you want to multiply your position. This multiplier increases the number of loans in the chain, making the position more sensitive to price changes. Wirex will initiate a chain of loans that use your deposited funds to purchase more cryptocurrency, which is then used as collateral for additional loans. This process can be repeated multiple times, with higher multipliers leading to greater potential returns—and risks.
Monitor and Close Your Position: You can close your Wirex Multiply position at any time. However, if the position reaches its lowest level (known as a margin call), it will automatically close to prevent further losses. Profits, minus fees, will be paid out in the
same currency you initially deposited.
Here's an example:
If you deposit $100 worth of BTC and predict the price will rise, using a 10x multiplier effectively lets you trade $1,000 worth of BTC. This could potentially earn you 10 times the profit compared to trading without leverage. However, with a 10x multiplier, the risk is significantly higher; a 10% drop in BTC’s price would result in losing your entire $100 deposit. Without the multiplier, BTC would need to drop 100% for you to lose the same amount.
You can learn more about how to open a Wirex Multiply here.
The Barbell Strategy
The barbell strategy is a risk management approach that can be particularly effective when using Wirex Multiply. This strategy involves splitting investments into two extremes:
Safe Investments: Allocate a significant portion of your portfolio to low-risk, stable assets (e.g., stablecoins).
Speculative Investments: The remaining portion is invested in high-risk, high-reward opportunities using Wirex Multiply.
This strategy helps balance the potential for high returns with the safety of more secure investments. By protecting a portion of your assets in low-risk investments, you can afford to take more significant risks with the rest, which is ideal when using a leveraged product like Wirex Multiply. You can learn more about the Barbell Strategy here.
Benefits of Wirex Multiply
Easy to Use: With an intuitive interface and automated features, earning high rewards is simple and straightforward.
Low Entry Threshold: You can start with a minimum deposit of $30-$100, depending on market conditions.
Complete Control: You have the power to set your preferred risk level and potential returns.
Profit and Loss Management: Utilize Stop Loss and Take Profit settings to lock in gains or minimize losses by closing trades at specific levels.
Advanced Technology: Leverage cutting-edge technology for real-time trade execution and price assessments across multiple providers.
Risks of Wirex Multiply
While Wirex Multiply offers the potential for high returns, it also carries significant risks:
Market Volatility: Cryptocurrency markets are highly volatile, and while this can lead to high profits, it can also result in substantial losses. The automated chain of loans used in Wirex Multiply can amplify these losses if the market moves unfavorably.
Leverage Risk: The use of leverage can magnify both gains and losses. If the market moves against your position, you could lose your entire initial investment.
Margin Calls: If the market value of your collateral drops below a certain level, a margin call is triggered, which can result in the automatic liquidation of your position to prevent further losses. This can happen quickly in a volatile market, potentially leading to significant losses.
Rollover Fees: The rollover fees associated with maintaining a Multiply position can add up over time, especially if the position is held for an extended period. These fees reduce the overall profitability of the trade.
Conclusion
Wirex Multiply is a powerful tool for those looking to capitalize on the volatility of cryptocurrency markets. By leveraging investments through an automated chain of loans, users can potentially achieve significant returns. However, it’s crucial to approach this tool with a clear understanding of the associated risks and to employ strategies like the barbell approach to mitigate potential downsides. With careful management and informed decision-making, Wirex Multiply can be an effective component of a broader cryptocurrency investment strategy.
TLDR; Why Wirex?
The Wirex platform offers a range of benefits for users looking to manage their assets and make transactions conveniently. Here are some key benefits our customers rave about:
Diversification ✅ We offer 150+ assets
Customer Support ✅ Out team is there for your 24/7
Community ✅ We have an incredible community of 6m+ customers over the world
Efficiency ✅ Over $20bn transactions processed with us
Trusted ✅ $30m insurance on digital assets
Safe and secure ✅ Our infrastructure is regularly tested and PCI DSS Level 1 compliant, which is the highest level possible
Cost Effective ✅ Free account, free free foreign exchange, low fees
Convenient ✅ wide range of on-ramp methods and high limits
Disclaimer
The information contained herein has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal, or investment advice. Wirex and any of its respective employees and affiliates do not provide financial, legal, or investment advice.
The value of cryptoassets may fluctuate significantly over a short period of time. The volatile and unprecedented fluctuations in price may result in significant losses over a short period of time. Any Cryptoassets may decrease in value or lose all its value due to various factors including discovery of wrongful conduct, market manipulation, change to the nature or properties of the Cryptoasset, governmental or regulatory activity, legislative changes, suspension or cessation of support for a Cryptoassets or other exchanges or service providers, public opinion, or other factors outside of our control. Technical advancements, as well as broader economic and political factors, may cause the value of Cryptoassets to change significantly over a short period of time.
