Despite deep declines in the cryptocurrency market so far, Swiss company 21Shares is seeing strong inflows of new capital. In doing so it is launching new ETP products on Bitcoin and Ether. Both based on risk control.
New investment products
The globally renowned Swiss investment firm 21Shares has just launched two new exchange-traded products (ETPs). They offer exposure to the two largest cryptocurrencies Bitcoin (BTC) and Ether (ETH). At the same time, the company has set its sights on mitigating their volatility by rebalancing the assets against the US dollar.
The main feature of both ETP products is to achieve volatility of around 40%. This is possible by rebalancing or allocating more assets to the dollar. The products are, so to speak, replicas of the S&P Dow Jones benchmarks which have a similar operating methodology.
The new products, 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP began trading on Switzerland’s SIX Exchange on July 20. They can be found under the tickers SPBTC and SPETH.
New ETPs solve the problem
The director of ETPs at 21Shares, Arthur Krause, in order to avoid misunderstandings, pointed out that the new ETPs with a 40% target do not refer to investment performance, but to the volatility achieved. In doing so he pointed out the essence of this type of product. He noted that the volatility of BTC recently reached 70%, while ETH reached 80%. In his eyes, such behavior is not only an opportunity but also a risk. In his words:
“21Shares S&P Risk Controlled Index ETPs combine exposure to volatile cryptocurrency with cash – which has zero volatility – to try to achieve the overall goal of moderate volatility.”
The new ETPs are an extension of 21Shares’ recently launched offering, which focuses its attention on the bear market. The Crypto Winter Suite was launched in June and aims for low-cost exposure to cryptocurrencies, during ongoing sell-offs. The Crypto Winter Suite targets both retail and individual investors, in countries such as France, Germany, Switzerland, Austria, Sweden, the Netherlands and Australia.
Record capital inflows
According to data released by 21Shares, the company has seen huge capital inflows recently. The year-on-year increase was $100 billion. As representatives point out:
“While our assets under management (AUM) are now down due to market conditions, our inflows are at an all-time high.”
They indicate that investors are treating the current deep discounts as market opportunities and are trying to buy each new low.