With crypto markets down more than 50% this year, 21Shares is working to replicate the S&P Dow Jones Indices benchmarks with its new risk-adjusted crypto investment products.
Swiss crypto investment firm 21Shares has launched two new exchange-traded products (ETPs) offering investors access to the biggest cryptocurrencies — bitcoin (BTC) and ethereum (ETH) — with the aim of reducing volatility by rebalancing assets against the US dollar (USD).
The new products, 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP, will begin trading on the Swiss SIX exchange on July 20. The ETPs will trade under the tickers SPBTC and SPETH, the firm announced on Wednesday.
Both ETPs target a 40% volatility level, which is achieved through dynamic rebalancing or placing more USD assets when volatility rises. The products aim to replicate the benchmarks of the S&P indices, which control risk by adjusting exposure to the underlying index and allocating it dynamically across US dollars.
21Shares ETP Product Director Arthur Krause stressed that the 40% target is about volatility, not investment performance. In a statement to Cryptooshala, Krause noted that large-cap stocks in the United States have shown a year-on-year historical volatility of 20%. For bitcoin, that figure was 70% and ether volatility was 80%, he said, adding:
“The ETP 21Shares S&P Risk Controlled Index combines exposure to a volatile cryptocurrency with cash that has zero volatility to try and meet the overall goal of moderate volatility.”
Sharon Liebowitz, senior director of innovation at S&P Dow Jones Indices, mentioned that the firm has been heavily involved in cryptocurrencies in recent years. Last year, S&P launched a cryptocurrency index that tracks the performance of the cryptocurrency market. Liebowitz noted that SPBTC and SPETH are examples of indexes aimed at eliminating the volatility associated with underlying cryptocurrencies.
The new ETPs join 21Shares’ bear market-focused offering known as the Crypto Winter Suite. 21Shares launched an investment offering in June, aiming to provide investment products specifically designed to provide low-cost access to cryptocurrencies during a market sell-off.
Like other cryptocurrency ETPs from 21Shares, Crypto Winter Suite targets both retail and institutional investors in countries such as France, Germany, Switzerland, Austria, Sweden, the Netherlands and Australia.
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Despite the ongoing bear market, 21Shares is seeing an influx of inflows to its platform, recently hitting $100 billion in new assets under management (AUM) since the start of the year. “While our assets are currently down due to market conditions, our inflows are at an all-time high,” Krause said, adding that 21Shares currently has $1 billion in assets. He added:
“Investors are holding tight and are still generating inflows for the long game. Investors who believe in crypto are “buying the dip” – especially through ETPs as a transparent, convenient and secure way to enter the asset class.”
According to Grayscale Investments, the current bear market could last another 250 days from July 2022 if the duration of previous cycles repeats.
Credit : cointelegraph.com