Introduction to 21Shares’ Innovative Offerings
The crypto world is as unpredictable as a cat on a hot tin roof, especially this year with the markets shrinking over 50%. In response, Swiss crypto investment firm 21Shares has decided to shake things up by replicating the S&P Dow Jones Indices’ benchmarks with two new exchange-traded products (ETPs) aimed at smoothing out the wild ride of Bitcoin and Ether.
Say Hello to SPBTC and SPETH
These new ETPs, dubbed the 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP, will hit the Swiss SIX Exchange on July 20, under the tickers SPBTC and SPETH. Imagine a VIP club where only the biggest cryptocurrencies get in — that’s what these ETPs are offering investors.
The Formula For Volatility Control
Both ETPs aim to maintain a target volatility of 40%. Think of it as trying to keep a hyperactive puppy calm — the trick is dynamically rebalancing assets, especially allocating more to the U.S. dollar as conditions heat up. As described by Arthur Krause, the director of ETP at 21Shares, the target is about managing volatility, not just chasing profits. He points out that while large-cap equities in the U.S. typically have an annual historical volatility of about 20%, Bitcoin clocks in at a dizzying 70% and Ether at a staggering 80%.
S&P’s Role in the Crypto Landscape
Sharon Liebowitz, a senior director at S&P Dow Jones Indices, added some color to the conversation by mentioning that S&P has been carefully exploring cryptocurrency indices over the past few years, with the aim to tame the volatility beast. Last year, S&P launched a cryptocurrency index, and now SPBTC and SPETH are here to further address the rollercoaster nature of these digital assets.
Resilience in a Bear Market
In the midst of a bear market, the newly launched products are part of 21Shares’ broader Crypto Winter Suite that focuses on providing low-cost exposure to crypto. It seems that even in hard times, 21Shares isn’t just sitting back; they’re actively looking to cater to both retail and institutional investors across multiple countries, including France, Germany, and Australia.
Looking Ahead: Investment Strategies and Insights
Despite the current market malaise, Krause paints a promising picture: inflows into their platform have hit an impressive $100 billion in new assets under management year-to-date. Although the overall AUM might be dipping, inflows are soaring, as investors, believing in the long-term potential of crypto, keep ‘buying-the-dip’ through these transparent, convenient ETPs.
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