With cryptocurrency markets shrinking more than 50% this year, 21Shares is replicating the standards of S&P Dow Jones Indices with its new risk-adjusted crypto investment products.
Swiss crypto investment firm 21Shares has launched two new exchange-traded (ETP) products that offer investors exposure to the largest cryptocurrencies – Bitcoin (BTC) and Ether (ETH) – while aiming to mitigate volatility by rebalancing assets in US dollars.
The new products, 21Shares S&P Risk Controlled Bitcoin Index ETP and 21Shares S&P Risk Controlled Ethereum Index ETP, will debut on the Swiss SIX Exchange on July 20.
Both ETP lines target a volatility level of 40%, which is achieved by dynamic rebalancing or allocating more assets to the US dollar when volatility is high. The products seek to replicate the parameters of S&P indices that control risk by adjusting exposure to the underlying index and dynamic allocation to the US dollar.
21Shares director of ETP, Arthur Krause, emphasized that the 40% target refers to volatility, not investment performance. In a statement to Cointelegraph, Krause noted that large stocks in the United States have shown a historic year-on-year volatility of 20%. For Bitcoin, that number is at 70%, while Ether’s volatility is at 80%, he said, adding:
“21Shares’ S&P Risk Controlled Index ETPs combine exposure to a volatile cryptocurrency with cash — which has zero volatility — in an effort to achieve the overall goal of moderate volatility.”
Sharon Leibowitz, Director of Innovation at S&P Dow Jones Indices, stated that the company has been actively involved in cryptocurrency in recent years. Last year, S&P launched a cryptocurrency index to track the performance of the cryptocurrency market. Liebowitz pointed out that SPBTC and SPETH are two examples of indexes that aim to address the volatility associated with the underlying cryptocurrency.
The new ETPs join 21Shares’ market-focused offering known as Crypto Winter Suite. 21Shares launched its investment offering in June, aiming to provide investment products tailored to the low cost exposure to cryptocurrencies amid the market sell-off.
Just like other crypto ETPs from 21Shares, Crypto Winter Suite is targeted at both individual and institutional investors in countries like France, Germany, Switzerland, Austria, Sweden, the Netherlands and Australia.
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Despite the ongoing bear market, 21Shares has seen an influx of inflows on its platform, recently reaching $100 billion in new assets under management (AUM) to date. “While our assets under management are now down due to market conditions, our inflows are at an all-time high,” Krause said, adding that 21Shares currently has $1 billion in assets under management. he added:
“Investors are holding strong and still creating flows for the long game. Investors who believe in cryptocurrencies are “buying dip” – especially via 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.