European cryptocurrency investment firm 21Shares rolled out two new Bitcoin and Ether exchange-traded products (ETP) on Wednesday. The new offerings are risk-adjusted due to their fixed limited volatility of 40%, which is accomplished by dynamically allocating more assets to the US dollar when volatility spikes.
Risk-controlled ETPs Designed to Replicate S&P Dow Jones Indices’ Benchmarks
21Shares’s two new Bitcoin and Ether ETPs hit the market amid persisting challenges in the crypto sector as inflation continues rising to new highs. However, the new products are risk-adjusted as they aim to reduce volatility by rebalancing assets to the USD. The greenback has strengthened significantly in the recent period, reaching 1:1 parity with the euro last week for the first time in 20 years.
This design, which has a target volatility level of 40%, replicates S&P indices benchmarks that mitigate risk by modifying the exposure to the underlying index and dynamically reallocating assets to the USD when volatility rises. This way, 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP offer “investors with entry to the asset class in a risk-controlled manner.”
“Data from our research team shows that adding Bitcoin or Ethereum exposure to a traditional investment portfolio can significantly enhance overall risk-adjusted performance. These newest ETPs based on S&P Dow Jones Indices world-class indices allow investors to realize the benefits of these innovative crypto exposures while controlling for volatility.”
said Arthur Krause, Director of ETP Product at 21Shares.
Join our Telegram group and never miss a breaking digital asset story.
Exposure to USD Reduces Overall Volatility to Cryptocurrencies
Krause stressed that the 40% target refers to market volatility and not investment performance. He also pointed out that the large-cap U.S. stocks have displayed annual historical volatility of 20%, compared to Bitcoin and Ether’s volatility of 70% and 80%, respectively.
He added that by allowing investors to have a combined exposure to crypto assets and zero-volatility cash, the new exchange-traded products will attempt to bring down the high volatility of crypto assets to a more moderate level.
The fresh Bitcoin and Ether ETPs will join the company’s bear market-oriented lineup known as Crypto Winter Suite. The suite was launched last month as a part of 21Shares’ plan to allow investors to have low-cost exposure to cryptocurrencies amid the sharp drawdown in recent months. Crypto investors have been favoring short positions in Bitcoin amid the ongoing crypto winter, with total investments in short Bitcoin Exchange-traded funds (ETFs) hitting a record $88 million over the past 4 weeks.
The products will begin trading on the Swiss SIX Exchange on July 20 under ticker symbols SPBTC and SPETH. Earlier this year, the Zug, Switzerland-based firm launched the first-ever USD Yield ETP in May.
What do you think about the new 21Shares’ risk-adjusted ETPs? Let us know in the comments below.
The post New 21Shares Bitcoin and Ether ETPs Limit Volatility to 40% appeared first on The Tokenist.
