Anyone following the crypto market in recent years will know that the prices of digital coins can fluctuate wildly. This is not just true of the smaller ones – the heavyweight Bitcoin also goes through some significant ups and downs. In 2022, for instance, the world's best-known cybercurrency lost around two thirds of its value following the collapse of the FTX exchange. This year, too, it hovered for months between USD 60,000 and USD 70,000, before the US elections sent it rocketing skywards. “Congratulations Bitcoiners!”, wrote Trump on his Truth Social network, after the coin pushed through the USD 100,000 barrier. Not only is the US president-elect bringing a whole raft of crypto-friendly lawmakers into Congress, but in his election campaign he also pledged to make the United States the “crypto capital of the planet” and to build up a national stockpile of bitcoins. Many market players are now hoping that the crypto industry will finally shed its disreputable image and embark on a sustainable and less volatile upswing.
According to Mike Novogratz, founder and CEO of US crypto firm Galaxy Digital, the industry is experiencing a paradigm shift just now. “Bitcoin and the entire ecosystem of digital assets are about to enter the financial mainstream. This momentum is fuelled by institutional adoption, advancements in tokenisation and payments and a clearer regulatory path,” said Novogratz of the current situation. The introduction of spot ETFs on cryptocurrencies is also progressing: corresponding passive investment vehicles on the two largest digital assets, Bitcoin and Ethereum, have since been listed on the stock market. Speculation is already rife that Solana spot ETFs may be approved as well, with VanEck, 21Shares and Canary Capital having made the relevant applications. Under the new SEC chairman, the approval process could be much faster than it was for the two pioneers.
The euphoria among crypto enthusiasts can also be seen on the price targets. ARK Invest, for instance, reckons that the positive factors, from institutional investments through to its function as digital gold, could drive the price of Bitcoin to as much as USDtn 1.5 by 2030. Although it does, of course, remain to be seen whether the investment firm is correct, the progress on regulatory issues and the technical possibilities of the blockchain suggest huge opportunities for crypto assets. Given that the market is still new, it would be relatively risky for investors to put all their eggs in one basket. As it is far from certain which coin will attract the greatest attention going forward, it can do no harm to cover a range of potential winners. The Leonteq Crypto Market Index allows eleven crypto assets to be brought into a portfolio in one go. The composition of the barometer is not static, but is reviewed every quarter and adjusted where necessary. Inclusion is tied to certain criteria, such as sufficient fungibility, along with minimum requirements on liquidity and market capitalisation. At the moment Bitcoin, Ethereum and XRP are setting the tone, the trio currently accounting for two thirds of the index weight.
Although the active approach entails costs, at an annual management fee of 1.95% p.a. these are not disproportionately high in the cybercurrency sector. The tracker certificates, which have no fixed term and fully reflect the value of the index after costs, are offered in CHF, EUR and USD currency tranches. In light of the considerable fluctuation on the market, however, the chosen capital commitment should always be consistent with the investor’s own risk profile and their overall portfolio.
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