Top Cryptocurrency News: 21Shares launches S and P risk-controlled BTC
With its new risk-adjusted cryptocurrency investment products,
21Shares is attempting to match the benchmarks of the S and P Dow Jones Indices despite the over 50% decline in the cryptocurrency markets this year.
21Shares, a Swiss cryptocurrency investment firm, has introduced two new exchange-traded products (ETPs) that provide investors exposure to the two major cryptocurrencies, BTC and ETH, while also attempting to reduce volatility by rebalancing assets to the U.S. dollar (USD).
On July 20, the Swiss SIX Exchange will begin trading the two products, 21Shares S and P Risk Controlled BTC Index ETP and 21Shares S and P Risk Controlled ETH Index ETP. The firm said on Wednesday that the ETPs would trade under the tickers SPBTC and SPETH.
Both ETPs aim for a volatility level of 40%, which is attained through dynamic rebalancing, or by allocating more assets to USD as volatility increases. By altering the exposure to the underlying index and dynamically allocating to U.S. dollars, the products try to mimic the benchmarks of S and P indexes that manage risk.
According to Arthur Krause, Director of ETP Product at 21Shares, the 40 percent aim is for volatility rather than investment performance. He added that large-cap shares in the US have historically shown yearly volatility of around 20%.
This percentage was 70% for Bitcoin and 80% for Ether, he added, noting that “the 21Shares S and P Risk Controlled Index ETPs mix exposure to volatile cryptocurrencies with cash — which has no volatility — in an effort to reach the overall aim of moderate volatility.”
According to Sharon Liebowitz, senior director of innovation at S and P Dow Jones Indices, the firm has been actively involved with cryptocurrency in recent years. Last year, S and P introduced a cryptocurrency index to measure the performance of the cryptocurrency market. According to Liebowitz, such indexes addressing the volatility linked to underlying cryptocurrencies include SPBTC and SPETH.
The new ETPs complement the Crypto Winter Suite, a bear market-focused offering from 21Shares. In the midst of the market sell-off, 21Shares launched the investment offering in June with the goal of giving investment solutions particularly created for low-cost exposure to cryptocurrencies.
Just like other cryptocurrencies ETPs by 21Shares, the Crypto Winter Suite targets both institutional and individual investors in nations including France, Germany, Austria, Sweden, Switzerland, the Netherlands, and Australia.
