The "BITO" symbol has been electrifying investors recently. This is the abbreviation under which the first Bitcoin ETF was launched on the New York Stock Exchange on 19 October. The provider, ProShares, issued it with a view to enabling passive investment in the most important cryptocurrency in the world. It means investors do not need their own wallet or access to a stock exchange specialising in the digital currency in order to back this up-and-coming asset class. Although the launch certainly marks a milestone for the ETF market, cryptos have long been part of the world of structured products. As an innovative and technology-leading issuer, Leonteq committed itself to this segment at an early stage. This has enabled it to build up the largest portfolio of securitised crypto assets in Switzerland.
It goes without saying that the number 2 in this market, Ethereum, should not be disregarded. Leonteq issued participation products on the cryptocurrency, known as Ether (ETH) for short, a good two years ago. A look at the performance record shows that these tracker certificates have enabled investors to tap into the ascent of the cybercurrency simply, cost-efficiently and, above all, to the fullest extent. The USD-denominated ETH tracker (symbol: UETHTQ) entered SIX trading on 1 November 2019, since when the structured product has appreciated by almost 2300%. On the anniversary date, the CHF-denominated variant (symbol: CETHTQ) launched on the same date had posted growth of around 2150%. The performance gap can be attributed to currency movements, with the Swiss franc having risen against the US dollar in the last two years.
Anyhow, Leonteq has given the product a sort of "live-cell therapy" following the surge in prices. Three new trackers on the ETH/USD pair have been trading on the SIX since the end of October. Investors can choose to bet on the cryptocurrency of the moment in USD, CHF or EUR. Naturally, the existing products have become much more expensive in absolute terms. Leonteq is responding by reducing the ratio to 0.01 – for the older certificates this indicator is 0.1. The new issues map the underlying 1:100, making the products more fungible, which in turn allows them to be dosed finely. When it comes to fees, nothing has changed: whatever the transaction currency, the current cost rate is 1.50% p.a. In return for this small contribution, investors can bet on this highly sought-after underlying with no term limit.
Ether has shown enormous momentum in the last few weeks especially – its price has risen by almost a half within the space of a single month. Not only has the cryptocurrency managed to beat the previous high reached in May, but the ETH/USD pair also surged upwards, breaching the key USD 4,000 barrier. Fundamentally, rampant inflation and the increasing use of the Ethereum platform for financial applications of all kinds are seen as drivers behind the rally alongside the Bitcoin ETF mentioned at the start. These positive factors cannot disguise the fact that this is a relatively young asset class that is also particularly susceptible to fluctuations. For Ether, historic volatility in the year to date has been more than 100%. Investors should be aware of the particular risks, whether they are jumping in for the first time or using the new issue for a product swap. Thanks to current trading, there is nothing to prevent a stop-loss price being set in order to limit the risk of loss.
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.
