Since the birth of Bitcoin a good 10 years ago, an intensive debate has been raging between technology geeks, investors, analysts and strategists. One side has general doubts as to the sense and hence status of the digital money as an independent currency. Its proponents, meanwhile, are convinced that there is a great future ahead for the means of payment based on blockchain technology. Their main argument is that neither banks nor government institutions can exert an influence on Bitcoin and its peers. Whatever the truth of the matter, crypto-currencies have recently made an impressive comeback following the disastrous sell-off of the previous year. The positive mood was also in evidence at this year’s Blockchain Week in New York. Held in mid-May, it saw experts from around the world come together in the US metropolis to discuss the latest trends and the future prospects of this innovative financial market spectrum.
“Digital assets are here to stay”, reckons Michael Sonnenshein, a fund manager at Grayscale Investments. Founded in 2013 and specialising in crypto-currencies, according to its own figures the asset manager has some USD 1.2 billion in assets under management. Intercontinental Exchange Inc. also made waves at Blockchain Week: the stock market operator and parent company of the New York Stock Exchange announced that trading in Bitcoin futures contracts and the corresponding custody services would start in July. San Francisco-registered Coinbase has already been offering such a custody service for crypto-currencies since last October. The wallet specialist has since recorded a volume of USD 1 billion in transactions. This success is seen as an indicator that institutional investors such as hedge funds or foundations, for instance, will increasingly take positions in this specialised investment class.
The newly aroused interest is not limited to the USA: here, too, there is widespread hope of an end to the deep “crypto winter”. This theory is supported by the recent significant increase in the volume of trading in the structured products in this investment field listed on the SIX Swiss Exchange. Leonteq addressed this issue at an early stage and now offers the largest selection of investment products in crypto-currencies on the SIX. The spectrum ranges from a simple or optimised participation in the Bitcoin price through a targeted position in an Altcoin to diversified investment. One of the key advantages of all products is that investors do not have to buy the crypto-currencies directly or store them digitally. That means they are neither reliant on access to an unregulated exchange nor faced with possibly opaque accounting processes. The products mentioned include two actively managed certificates, where Leonteq is building on the expertise of Swissquote. Special algorithms have been developed in the Quantitative Asset Management department of the online broker in order to achieve a risk-optimised positioning.
In addition to a USD cash instrument, the Swissquote Multi Crypto Active Index comprises the actively traded, decentralised crypto-currencies with the highest market capitalisation: Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC). Although the Swissquote Multi Crypto Active Index was unable to escape the segment correction that took place after its launch in March 2018, the innovative benchmark has since been making good ground. In the meantime the tracker certificate on the Swissquote Bitcoin Active Index, launched back in November 2017, has already gone past its issue price, which means the actively managed product has outperformed the Bitcoin price. Alongside technical models, key ratios for the realised volatility and the buy/sell pressure, the algorithm used for this benchmark also considers the mood on social networks. To reduce volatility, the weighting of the cash holdings is increased in times of uncertainty and downward trends. Our conclusion is that Leonteq offers effective, low-cost and above all transparent solutions for capitalising on the potential strengths of this special investment class. Consideration may, for instance, be given to achieving protection against inflation or diversification of the portfolio. Bets on the long-term success of the digital currency are just as possible.
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.