image source : Canva Library

On July 20 the world’s largest issuer of cryptocurrency exchange-traded products, 21Shares announced the launching of two new exchange-traded products (ETP) that will offer investors exposure to the largest cryptocurrencies — Bitcoin (BTC) and ether (ETH) — and aims to soften volatility via rebalancing assets to the United States dollar.

The 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP, will begin trading under tickers SPBTC and SPETH on the Swiss SIX Exchange on Wednesday.

Both ETPs focus on a volatility level of 40%, which is accomplished through progressively rebalancing or allocating more assets to USD when volatility rises. The products are looking to replicate benchmarks of S&P indexes that control risk by changing the exposure to the underlying index and dynamically allocating to U.S. dollars.

The Swiss crypto investment firm’s director of ETP, Arthur Krause, emphasized that the 40% target denotes volatility rather than investment performance.

In a statement, Krause noted that large-cap equities in the US demonstrated yearly historical volatility of 20%. For BTC, this figure remained at 70%, while Ether’s volatility amounted to 80%, he said, adding: “The 21Shares S&P Risk Controlled Index ETPs combines exposure to a volatile cryptocurrency with cash — which has zero volatility — to attempt to achieve the overall target of moderate volatility.”

Both of the new ETPs join the 21Shares’ bear market-focused offering known as Crypto Winter Suite. 21Shares launched the investment offering in June, expecting to give investment products specifically designed for low-cost exposure to crypto midst of the market sell-off.

Regardless of the ongoing bear market, 21Shares has seen an influx in inflows on its platform, recently hitting $100 billion in new assets under management (AUM) year-to-date.

Joyashree Dey

CBW - External Analyst

INDIA