The key factors that are currently driving the crypto market can be summarised briefly as increasing acceptance in the wake of the licensing of BTC and ETH spot ETFs, falling interest rates and rising risk tolerance on the part of investors. There will also be something very different on the calendar for 2024, though: the halving. This event, which takes place every four years and in which the reward for mining new blocks is halved, is scheduled for April 2024. The payment per block will be reduced from 6.5 to 3.25 bitcoins. This reduction in supply alongside possibly the same or even heightened demand could provide for additional upside potential. A look in the rear-view mirror, at any rate, shows that the price of Bitcoin has risen tangibly in the years after a halving.
The rise in the price level after a halving is certainly remarkable. Whereas BTC stood at below USD 16 in 2012, the token was moving between USD 256 and 1,024 at the time of the next halving in 2016. In 2020 the range was already as wide as USD 4,000 to 16,000. That leads “PlanB”, a Bitcoin analyst highly regarded on social media, to predict the token will hit new all-time highs. According to his “Stock-to-Flow” model, a fundamental approach based on scarcity, the price range for Bitcoin in the next four years is calculated to go from USD 65,000 to over 500,000. PlanB is not alone in predicting this huge price potential: British crypto fan Adam Back, founder of the blockchain company Blockstream, reckons the digital asset could rise to USD 700,000 within the next halving cycle. Probably the highest estimates come from star investor Cathie Wood of investment company ARK Invest. In her “Big Ideas” study this year, the expert writes: “The price of a single Bitcoin could rise above USDmn 1 in the next ten years.” In the best case the crypto asset could even hit USDmn 1.48 by the end of the decade, but even in the worst case Bitcoin is still expected to reach USD 258,500, an almost sixfold increase on its level today.
While the investment world waits for the first Bitcoin and Ethereum ETFs, Leonteq has long had products based on the crypto assets with a comparable payout profile in its portfolio. The movements of the digital assets can be followed 1:1 with the corresponding tracker certificates. Not only do the structured products enable full participation, but thanks to a cleverly selected ratio they have also been put within easy reach, as it were, consequently allowing investment with smaller amounts. The tracker (ISIN CH0587307023) on Bitcoin, for instance, is offered at a ratio of 0.001, meaning that only USD 42 has to be paid for BTC rather than USD 42,000. The product is also offered at this ratio in the CHF (ISIN CH0587307015) and EUR (ISIN CH0596609245) currency tranches. The fees for each tranche come to 1.50% p.a.
Leonteq had also launched the corresponding tracker certificates on the world's second-largest virtual currency, Ethereum, long before the first ETF was ever discussed. The USD-denominated participation instrument (ISIN CH1143298599) was issued more than two years ago along with a CHF (ISIN CH1143298573) and EUR (ISIN CH1143298581) variant. The ratio for these products is 0.01, while the administration fees for each are 1.50% p.a. Not only do all the above trackers offer convenient access to the crypto assets, but the open-ended structure allows investors to select the investment period that suits them.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.