Despite the collapse of the cryptocurrency markets this year, the Swiss cryptocurrency ETP company 21Shares has witnessed new crypto inflows reach new all-time highs YTD.
With its new risk-adjusted cryptocurrency investment products, 21Shares is attempting to match the benchmarks of the S&P Dow Jones Indices despite the over 50% decline in the cryptocurrency markets this year.
In an effort to reduce volatility, the Swiss cryptocurrency investment company 21Shares has introduced two new exchange-traded products (ETPs) that provide investors access to the two biggest cryptocurrencies, Bitcoin (BTC) and Ether (ETH) (USD).
On July 20, the Swiss SIX Exchange will begin trading the two products, 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP. The business revealed on Wednesday that the ETPs will trade under the tickers SPBTC and SPETH.
By dynamically rebalancing, or allocating more assets to USD when volatility increases, both ETPs aim to reach a volatility level of 40%. The products alter the exposure to the underlying index and dynamically allocate to U.S. dollars in an effort to replicate the benchmarks of S&P indexes that control risk.
The 40 percent aim, according to Arthur Krause, Director of ETP Product at 21Shares, is for volatility rather than investment performance. Large-cap shares in the US showed yearly historical volatility of 20%, according to a statement by Krause. Compared to Ether, which had an 80% volatility, Bitcoin had a figure of 70%, he claimed, adding:
“The 21Shares S&P Risk Controlled Index ETPs combine exposure to a volatile cryptocurrency with cash — which has zero volatility — to attempt to achieve the overall target of moderate volatility.”
According to Sharon Liebowitz, senior director of innovation at S&P Dow Jones Indices, the company has been actively engaged in the cryptocurrency space recently. A cryptocurrency index measuring the performance of the crypto market was introduced by S&P last year. According to Liebowitz, two indices that try to reduce the volatility linked to underlying cryptocurrencies are 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 specifically created for low-cost exposure to cryptocurrencies.
The Crypto Winter Suite, like other cryptocurrency ETPs offered by 21Shares, is intended for institutional and retail investors in nations like France, Germany, Switzerland, Austria, Sweden, the Netherlands, and Australia.
Despite the ongoing bad market, 21Shares has experienced a surge in new assets under management (AUM) on its platform, recently surpassing $100 billion year-to-date. According to Krause, 21Shares presently has $1 billion in AUM. “While our AUM is down now owing to the market conditions, our inflows are at an all-time high,” he added. Added him:
“Investors are holding strong and still creating inflows for the long game. Investors who believe in crypto are ‘buying-the-dip” — and particularly via ETPs as a transparent, convenient and safe way to enter the asset class.”
If the length of prior cycles repeats itself, the present bear market might continue for another 250 days starting in July 2022, according to Grayscale Investments.
