The licensing of the first ETFs was the ultimate accolade for Bitcoin and the like, and another step towards going mainstream. It is not only private investors who are reaching for the token now, though – companies are also parking more of their money in digital currencies. Just recently, for instance, social media platform Reddit, which applied in the middle of February for a listing on the New York stock exchange, invested a small portion of its excess cash reserves in Bitcoin, Ether and Matic. MicroStrategy, the well-known crypto investor and software manufacturer, also made further purchases lately. The US company increased its existing billion-dollar holdings by USDmn 155, or around 3,000 bitcoins. In the view of Ben Zhou, co-founder and CEO of Bybit, the world’s third largest crypto exchange, the Bitcoin ETF heralds a new epoch of institutional and wider crypto adoption. “It’s a clear indicator that crypto's inherent value as a global transaction system with near instant finality and total transparency is being realised,” Zhou states.
If star investor Cathie Wood of investment company ARK Invest is to be believed, the token is set for a brilliant few years. In her annual “Big Ideas” study, published recently, she reckons that the decentralisation and transparency of the Bitcoin network in particular could drive Bitcoin higher. “We believe that the long-term opportunities of Bitcoin will get better,” the ARK experts write in their report, citing three possible scenarios for the crypto giant. In the best-case scenario, the ARK Invest team thinks Bitcoin could climb to USDmn 1.48 by 2030. This corresponds to a potential rise of more than 2,000% from today. Even in the base and the bear scenarios, investors can expect huge increases, in the first case USD 682,800 and in the bear case a still respectable USD 258,500. Reto Stiffler from Crypto Consulting is also confident: he thinks that the Bitcoin price could reach USD 100,000 to 120,000 by the end of this year.
In light of these prospects, it could be worthwhile for private investors also to add Bitcoin to their portfolio. One suitable product is the newly issued ETP+ on the Leonteq Bitcoin ETF Index, which participates one-to-one in the price movement of the underlying asset. The underlying is in turn composed of four ETFs: the iShares Bitcoin, the Fidelity Physical Bitcoin, the ARK 21 Shares Bitcoin and the Bitwise Bitcoin ETF. The quartet is equally weighted and has a handsome track record: calculating back, this selection finished four of the last five years in positive territory, with the best performance to date, 304%, being achieved in 2020 (see graph). Overall, the Bitcoin ETF Index posted an average annual gain of more than 50% in the back test.
The new ETP comes with plenty of other benefits, first and foremost of which is that the product can be graced with a “+”. Since the ETFs used can be deposited as a pledge with the SIX, Leonteq has been able to launch an ETP+ on an index consisting of four of the best-known spot Bitcoin ETFs. That means the product offers a protective function through an explicit collateralisation: a pledge is deposited with SIX SIS AG for every exchange traded product. If the price of the certificate rises, Leonteq increases the pledge – and vice versa. If Leonteq were to enter into payment difficulties, the pledge would be liquidated and the equivalent of the investment product would be distributed to the holders of the ETPs. Another advantage of the ETP+ is that the direct possession of Bitcoin is not entirely without risk: hacker attacks or even the loss of the storage medium could become a problem. That is not the case with the ETP+, which has a secure place in the custody account. Last but not least, the Bitcoin ETF Index is spread over four ETFs, all from issuers enjoying a high reputation: iShares, Fidelity, ARK and Bitwise.
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