21Shares Launches S&P Risk-Controlled Bitcoin and Ether ETPs

With cryptocurrency markets shrinking over 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) that offer investors exposure to the major cryptocurrencies – Bitcoin (BTC) and Ether (ETH) – while aiming to mitigate volatility by rebalancing assets to 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 have a volatility level of 40%, which is achieved through dynamic rebalancing, or allocating more assets to USD when volatility increases. The products seek to replicate the S&P indices’ benchmarks which control risk by adjusting exposure to the underlying index and dynamically allocating to the US dollar.

21Shares’ director of ETP product Arthur Krause emphasized that the 40% target refers to volatility rather than investment performance. In a statement to Cointelegraph, Krause noted that major U.S. stocks showed annual historical volatility of 20%. For Bitcoin, this figure was 70%, while Ether’s volatility was 80%, he said, adding:

“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 objective of moderate volatility.”

Sharon Liebowitz, senior director of innovation at S&P Dow Jones Indices, mentioned that the firm has been actively involved in crypto in recent years. Last year, S&P launched a cryptocurrency index that tracks the performance of the crypto market. SPBTC and SPETH are examples of indices that aim to address volatility associated with underlying cryptocurrencies, Liebowitz noted.

The new ETPs join 21Shares’ bear market-focused offering known as the Crypto Winter Suite. 21Shares launched its investment offering in June, aiming to offer investment products specifically designed for low-cost exposure to mid-market crypto.

Just like other crypto ETPs from 21Shares, the Crypto Winter Suite targets both retail and institutional investors in countries such as France, Germany, Switzerland, Austria, Sweden, the Netherlands and Australia.

Related: SEC extends window to rule on ARK 21Shares spot Bitcoin ETF to August

Despite the ongoing bear market, 21Shares has seen an influx of inflows onto its platform, recently hitting $100 billion in new assets under management (AUM) so far this year. “While our AUM is down now due to market conditions, our inflows are at an all-time high,” Krause said, adding that 21Shares currently has $1 billion in AUM. He added:

“Investors are holding strong and still creating inflows for the long game. Investors who believe in crypto are buying-the-dip – and especially via ETPs as a transparent, convenient and safe 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 itself.