For many investors in the crypto industry, this may be the first time hearing about 'Dual Currency Investment', or they may have some vague understanding of the concept.
Recently, Binance Square held an AMA on Dual Currency Investment, explaining its underlying mechanism and some tips for beginners.
The guests for this session were: Data Trader, creator of Binance Square Chain Research Society, crypto options player, Weibo finance KOL Longxin Yan, and Binance finance Vivian. Below is the essence of the AMA:
🔥 What is Dual Currency Investment?
Longxin Yan:
"Dual Currency Investment is a passive financial tool, operating similarly to the deposit mechanism in real estate transactions. For example, if you want to buy a second-hand house, you need to pay a deposit to lock in the price and prevent default during settlement. In dual currency investment:
As a "seller", you receive the premium (similar to a deposit)
Promise to buy/sell cryptocurrency at the agreed price in the future
The exchange acts as an intermediary to ensure contract enforcement"
Chain Research Society:
"This is essentially a simplified version of options strategies in traditional financial markets:
Bottom fishing = Selling put options (using USDT to take over)
Topping out = Selling call options (locking in the selling price)
The exchange packages complex options contracts into products that even beginners can operate.
Vivian:
For Binance financial products, users are quite familiar. We offer various investment options, from capital-protected products (such as savings, fixed-term investments, similar to bank deposits) to high-risk high-return products (such as dual currency investments). For users looking to optimize capital efficiency, dual currency investment is a tool worth paying attention to.
Can be simply understood as: Dual Currency Investment = Limit Order + Interest
Traditional limit order: Placing an order in the spot market (e.g., current BTC price is 93,000, placing sell order at 100,000), waiting for market trigger, funds are idle with no returns.
Dual Currency Investment: Set the same target price (e.g., sell BTC at 100,000), but earn additional premium interest (annualized around 3.65%-100%+). Regardless of whether the order is executed, returns can be obtained.
🔥 Features of Binance Dual Currency Investment:
High Returns
Base annualized return starting at 3.65%, some short-term products can reach over 100%.
Actual return formula: Annualized return × (Holding days / 365). You can confirm how to calculate the holding days logic.
Flexible Duration
Short-term (within 7 days): Suitable for capturing market fluctuations (e.g., current BTC price is 93,000, can set sell order at 105,000).
Long-term (6 months): Suitable for conservative strategies, can set higher target price (e.g., sell BTC at 130,000).
Simple Operation
Supports major cryptocurrencies (BTC, ETH, etc.), minimum investment starting at 0.1U.
No complicated operations needed, automatically executed after setting price and duration.
Of course, dual currency investment is not completely capital-protected, and one may miss opportunities due to significant price increases. Teacher Longxin Yan provided an example: In December 2023, a typical case occurred where a user aiming for a 300% annualized return placed a BTC sell order at 100,000 (only a 5% price difference) and, within a week, the price soared to 110,000. Although they earned premium income, they missed out on a price increase of 15,000 per coin.
👉 Users suitable for dual currency investment and beginner's guide
Coin-hoarding users: Earn interest while holding coins, avoiding idle funds.
Swing traders: Earn additional premium income compared to regular limit orders.
Conservative investors: Choose long-term + wide price difference (e.g., more than 15%), reducing exercise risk.
For users who are just starting with dual currency investments, risk management is crucial, and the guests provided some tips:
Small-scale trial: Try with 0.001 BTC or 10 USDT
Choose safety margin: Price difference >10% (e.g., sell BTC at 107,000)
Duration choice: Prefer 14-30 day products
Hedging preparation: Reserve 20% of funds for extreme market conditions
Moreover, regarding some common questions from users, the guests provided the following answers. To determine if the current market conditions are suitable for dual currency, Teacher Longxin Yan mentioned two main indicators: first, volatility index >80 (premiums are high during panic), and second, consolidation period: BTC has been fluctuating in a 5% range for over 2 weeks. Some users are worried about their price being executed and want to remedy it; the Chain Research Society teacher offered a solution: if you place a dual currency sell order for BTC at 100,000 and the price rises above 100,000, it will be executed: you can use part of your funds to open a perpetual contract long position and buy back the BTC you sold in dual currency.
For altcoins, one should be more cautious when investing. A good strategy is to only sell high and not bottom fish (as liquidity risk is high), and set a price difference of >30% (e.g., current price 100 USD, placing sell order at 130 USD).
🔥 To investors:
Finally, I want to remind users that dual currency investment is not a completely capital-protected investment; careful consideration is needed before making any investment decisions. Dual currency is a 'time-for-space' game, suitable for patient investors, and always keep 30% cash on hand for black swan events during investment.
