With the market crash erasing $ 2.000 trillion from the value of all cryptocurrencies in just a few months, 21Shares unveiled new risk-adjusted cryptocurrency investment products based on the S&P Dow Jones Index benchmarks.
In particular, two new exchange-traded products (ETPs) will aim for a volatility level of 40% by rebalancing assets against the US dollar.
Risk-adjusted cryptocurrency investment products
Both exchange-traded products offer investors exposure to major cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), and will be traded on the Swiss SIX Exchange.
In particular, SIX Swiss Exchange, which is part of the larger SIX Group and operates under the supervision of the Swiss Financial Market Supervisory Authority (FINMA), is the third largest stock exchange in Europe and a primary capital market for Swiss securities.
ETPs, which will be traded under the abbreviations SPBTC and SPETH, combine exposure to a volatile cryptocurrency with liquidity in order to achieve an overall moderate volatility target.
This follows the company's commitment to launch the S&P Cryptocurrency Broad Digital Market (BDM) Index, which provides a snapshot of the performance of the cryptocurrency market and includes more than 240 tokens.
The index is part of an expansion of S&P's recently launched digital asset benchmark series, the S&P Digital Market Indices. Furthermore, the company pointed out that SPBTC and SPETH are examples of indices that aim to address the volatility associated with the underlying cryptocurrencies.
Rebalancing of activities
As the new risk-adjusted cryptocurrency investment products track the benchmarks of the S&P Dow Jones indices, they aim for a volatility level of 40%.
This is achieved by rebalancing or allocating multiple USD assets in the event of volatility. To put it in context, S&P index benchmarks control risk by adjusting exposure to the underlying index and dynamically allocating in US dollars.
The S&P Risk Parity Index series as a whole provides a rules-based benchmark for risk-weighted parity strategies. These indices build risk-equal portfolios using futures to represent multiple asset classes and the risk / reward characteristics of the funds offered in the risk-par space.
Arthur Krause, director of ETP at 21Shares, said the 40% target refers to volatility rather than investment performance, adding that large-cap stocks in the United States have an annual historical volatility of 20%. For Bitcoin, this figure stands at 70%, while Ethereum's volatility is 80%.
While cryptocurrency inflows have hit new all-time highs, recently hitting $ 100 billion in new assets under management (AUM) year to year, we are still in a general bear market and inflows to funds are level. lower than in the past. This is demonstrated by the latest weekly report from CoinShares, according to which digital asset investment products recorded inflows totaling $ 12 million last week, while investment product volumes remained very low, at 1 billion dollars over the course of the week.
Last month, 21Shares announced the launch of a series of new products, called Crypto Winter Suite, aimed at retail investors and institutional in countries such as France, Germany, Switzerland, Austria, Sweden, the Netherlands and Australia.