With cryptocurrency markets shrinking over 50% this year, the Swiss crypto ETP firm 21Shares is working to reproduce S&P Dow Jones Indices’ benchmarks with its new risk-adjusted crypto investment products that influence new crypto inflows hitting new all-time highs YTD.
The Swiss crypto investment firm 21Shares has launched two new exchange-traded products (ETP) offering investors exposure to the largest cryptocurrencies — Bitcoin (BTC) and Ether (ETH) — while aiming to soften volatility via rebalancing assets to the U.S. dollar (USD).
The new products will start trading on the Swiss SIX Exchange on July 20. The firm announced on Wednesday that the ETPs will trade under tickers SPBTC and SPETH,
Both ETPs target a volatility level of 40%, which is attained through enthusiastically rebalancing, or allocating more assets to USD when volatility increases. The products seek to imitate S&P indices’ benchmarks that control risk by adjusting the exposure to the primary index and enthusiastically allocating it to U.S. dollars.
21Shares’ Director of ETP Product Arthur Krause underlined the fact that the 40% target refers to volatility rather than investment performance. Krause said to Cointelegraph, that large-cap equities in the United States demonstrated annual historical volatility of 20%. For Bitcoin, this figure stood 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.”
Senior director of innovation at S&P Dow Jones Indices, Sharon Liebowitz, mentioned that the firm has been actively involved in crypto in recent years. SPBTC and SPETH are examples of indices aiming to address volatility associated with underlying cryptocurrencies.
Just like other cryptos ETPs by 21Shares, the Crypto Winter Suite targets both retail and institutional investors in countries like France, Germany, Switzerland, Austria, Sweden, Netherlands, and Australia.
In spite of the continuing 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. “While our AUM is down now due to the market conditions, our inflows are at an all-time high,” Krause said, adding that 21Shares currently has $1 billion in AUM.
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