In this write-up, we basically aim to highlight the potential risks that drive euro’s depreciation concerns and efficient hedging vehicle.

First & foremost, it is likely that the ECB would need to strengthen its dovish tone further given the backdrop of the Brexit referendum.

Dealing with a much-reduced universe of bonds, there is also a need for the ECB to clarify the purchase limits and we believe there is room to increase the issue limit already at today’s meeting, while extending the QE horizon beyond March 2017 can likely wait until September.

But the core inflation has been the biggest concern to recover at a snail’s pace, our model of core and ‘supercore’ inflation suggests that the underlying price pressures will improve but only at a snail’s pace over the forecast horizon. Weak wage pressures (subdued ULCs) and slow closing of the output gap will keep core inflation subdued and is expected to remain below the long-term average of 1.4% (average 1.2% between 2017 and 2020 in our estimate).

Therefore, we now expect core inflation to remain sluggish at 1.0% this year (June 0.9% YoY) and average 1.2% over the medium term, below the long-term average of 1.4% and compared to our previous forecast of 1.3% (2017-20). We expect headline inflation to average 0.4% this year followed by a pick-up to 1.5% in 2017.

Hedging Mechanism:

Euro’s with its major counterparts such as the dollar, sterling, and Japanese yen carry the equal amount of risks that are perceived due to macro level as well as microeconomic risks. So the alternative mode for mitigating exchange risks has struck at this point of time.

Although Bitcoin and its underlying infrastructure show a lot of potential for growth and innovation, many users of the so-called “cryptocurrency” are wary of holding it instead of other currencies such as the U.S. dollar because of the high volatility exhibited in the price of Bitcoin.

As the BTCEUR plummeting its prices are not foreseen in the near terms we think this right way of staying hedged at this juncture.

Thereby, the use of theoretically priced put options in Bitmex, “protective puts”, has to offer the stiff hedge against potential price slumps that Bitcoin may experience.

But the user of this protective put strategy is considered to be an investor with an optimistic view on the price of Bitcoin and wants to own some, but is uncomfortable with the potential for substantial losses due to price decreases.

Here, the investor’s major intentions are to reduce the risk of losses by owning Bitcoin while its price decreases and to lessen the volatility that his portfolio experiences at the expense of the cost of purchased options eating into potential profits.