Buy-the-Dip is a dual investment product that lets you earn high interest income before you successfully buy crypto at your target price. The APY for Buy-the-Dip can range from 10% to even around 300% depends on the target price and settlement date.
When should you use Buy-the-Dip?
Trading crypto is much riskier than trading stocks since the crypto market is very volatile. Dual investment products created by Pionex aim to help our customers to earn a steady return with relatively low risk. With Buy-the-Dip, you will buy BTC at a low price and earn passive income simultaneously. To further assist you in fully understanding the product, we categorized people’s investment goals into the following scenarios.
Scenario 1: You have a clear target price at which you would like to buy crypto
Simply invest at your target price! If you know the crypto market very well and have your own interpretation of market moves, simply invest at your own pace.
Scenario 2: You are blurred about the market but also do not want your cash to depreciate due to inflation
Set the target buy price far from the current price! In this case, the APY will be lower but mostly around 10%. This much APY is enough to beat inflation. For example, the current price of BTC is $20,500, so it can barely go down to $16,000 in a very short time. In this case, you can set the target buy price to be $16,000, then relax and earn a steady return in USDT at settlement.
However, keep in mind that anything fast changes could happen. It is still possible for the price of crypto to drop a lot in a very short time although with a small probability. If the price drops below $16,000 at settlement, you will still buy BTC at $16,000.
Scenario 3: You are willing to take some risk and believe in the value of cryptos in long term.
Even if the price keeps dropping after your Buy-the-Dip got exercised, you still believe in crypto and aim for long-term profit. In this case, subscribe to Buy-the-Dip at your expected buy price. Don’t stop investing in Buy-the-Dip when your bot gets exercised. This could lower the average buy price of crypto and will help you earn more once the crypto price bounces back. If you do not want to hold your bought crypto and wait for them to depreciate, you can reinvest them into Covered Gain at your target sell price while earning a high yield.
How does Buy-the-dip work?
Buy-the-dip aims to help traders buy crypto at the bottom price while earning interest income. It is accomplished by setting up a target buy price and the amount you want. Based on your input, we will find products for you to subscribe to.
Suppose you would like to buy 1 BTC at 20,000 USDT, but the current price of BTC is 22,000 USDT. In this case, you can subscribe to our BTC buy-the-dip product at the strike price of 20,000 USDT. Assume you subscribed to Buy-the-Dip with a target buy price of 20,000 USDT, duration of 1 day, APY of 30%, and return at the settlement of 0.6%.
You would expect the following payoff at settlement:
Scenario 1: Price of BTC < 20,000 USDT, you get (1+0.6%) in BTC
Scenario 2: Price of BTC ≥ 20,000 USDT, you get (1+0.6%)*20000 = 20120 in USDT
In other words, at settlement, if the strike price of BTC drops below or at your target buy price, you will buy BTC with your investment and earned interest. Or, if the strike price of BTC is still higher than your target buy price, you will earn interest in USDT based on the displayed yield.
Note: APYs and returns are different with various settlement dates and strike prices, and we will provide you with different combinations for you to choose
- Log in to your account at pionex.com
- Find the “Earn” -> “Structured” button on the top bar tools
- Find the “Auto-invest” button on the left-hand side
- There is [Buy-the-Dip] at the center of the page.
- Click on “Create the bot” and follow the instruction below
STEP 1: Fill in the Following Parameters
Please select the coin you want to buy: select the crypto you want to buy (we currently only offer BTC and ETH)
Buying price: the price you would like to buy 1 BTC/ETH at settlement.
Lowest Acceptance APY: your lowest expected APY. We will find products that have higher APY than your lowest expectation.
After filling out all those parameters, click Search.
STEP 2: Select the product you would like to buy
There is a list of products you can invest in, and they are sorted in descending price and ascending settlement period.
Buying Price: the target price you would like to buy crypto (in this case, we select BTC)
Settlement Period: the period between now and the settlement
APY: Annualized yield
Operation: click on [Details], and you will see the following information
On the [Details] Page, there is specific information for each product.
The settlement calculator shows the return if you invest 10,000 USDT in this product.
Rules for Investment: You can read through the rules if you are unclear about them.
FAQ: At the bottom of this page, there is a FAQ section, be sure to check them out.
Make sure you understand everything, select the product you would like to subscribe to,, and select [BUY].
STEP 3: Finalize Investment and Confirmation
The graph above shows the return if we invest 15 USDT in a Buy-the-Dip product at the target buy price of $19,000.
Investment: the number of stablecoins (in this case, USDT) you would like to invest
Settlement Calculator: the amount you will receive based on your investment in two scenarios
Current Estimated Yield: the extra income you will receive if the price at settlement is greater than the target buy price.
Benefits and Risk
Benefits: Before reaching your target price, you will keep earning high interest in USDT and buy more BTC once exercised.
Risk: The price may keep going down after you successfully buy bitcoin. Please keep that in mind. It is also possible that the price of BTC at settlement is lower than your target buy price, in which case you will buy BTC at a higher price.
Q: What is the best time to use Buy-the-Dip?
A: When you are holding some cash, waiting to earn some yield, and you are OK with buying crypto at your expected price, you can use Buy-the-Dip. For example, you think BTC may drop to $15,000, and if the price suddenly drops below $15,000, you are still okay with buying BTC at $15,000. In this case, you can subscribe to Buy-the-Dip with a target buy price of $15,000 and your expected settlement date. Then at settlement, if the current price is above $15,000, you will earn the displayed yield (USDT). If the current price is below or at $15,000, your investment + profit in USDT will all be used in buying BTC at $15,000 and go into your account.
Q: If I subscribe to Buy-the-dip, waiting to buy BTC at the target buy price of $20,000. However, at settlement, the price of BTC suddenly drops to $18,000. What will happen?
A: You will buy BTC at $20,000 and earn yield in BTC at the same time.
Q: Is there any risk when subscribing to Buy-the-Dip?
A: The risk of Buy-the-Dip is the fundamental risk of investment.
1. When your Buy-the-dip subscription is exercised, you buy crypto at your target buy price. If the market price keeps dropping, you need to take the risk of the price falling down. This risk is similar to a crypto price drop after you buy crypto.
2. At the settlement time of Buy-the-Dip, if the current price is far from the target buy price, you will also need to take the risk of the price difference. For example, if you subscribe to Buy-the-Dip at a target price of $20,000 to buy BTC, the duration is 5 days. After 5 days, if the price of BTC is $15,000 and it’s below the settlement price of $20,000, you will still buy BTC at $20,000 with your investment and yield in USDT.