The law of the free market economy is well-known: the price of any item is controlled by supply and demand. This applies also – or perhaps especially – to Bitcoin. With demand for the cyber currency from practically all sides having risen sharply, so its price has also grown exponentially. There is another unique factor at play for BTC, though: supply is limited to no more than 21 million units. There are currently around 18.5 million of them, and the newly mined quantity of the digital currency is "halved" every four years. The last halving took place in May 2020. This physical scarcity is among the reasons why some analysts are predicting breathtaking targets for the price of Bitcoin. Citigroup, for instance, sees Bitcoin climbing to as high as USD 318,000 before the end of the year. Singing from the same hymn sheet is hedge fund Off the Chain Capital, which reckons the most important cryptocurrency will close 2021 at USD 288,000.
The boom in BTC and the like is not leaving central banks cold either: they are likewise building their own means of digital payment at the moment. The ECB, for instance, is planning to launch what it calls the e-euro, which is to be issued in parallel with cash. "We will have a digital euro," said President Christine Lagarde at a virtual event held at the start of the year. The SNB is going down a similar route, having recently registered more than a dozen trade marks such as the "e-franc" with the Swiss Patent Office. These developments show that cyber currencies are gradually coming out of their infancy and taking an ever more important place in real life. It's high time, then, for private investors to familiarise themselves with this asset class as well. When it comes to the complex issue of "internet currencies", prospective buyers are well advised not to put all their eggs in one basket. That is why Leonteq brought an actively managed tracker certificate (ISIN CH0521604923) on the Swissquote Multi Crypto Index onto the market almost exactly one year ago. With astonishing success: the price has risen around sevenfold since its launch.
Building on this successful cryptocurrency strategy, at the end of March Leonteq issued another open-ended product on cyber currencies. The tracker follows the Swissquote Multi Crypto Mini Index, which is equivalent to a "lean" version of the Swissquote Multi Crypto Index. Unlike the basic model, the structured product is denominated in Swiss francs and comes at a much lower price. The starting level stood at CHF 25, so also appeals to those investors who want to gain diversified access to the crypto market with a lower capital commitment.
While the issue price of the Swissquote Multi Crypto Mini Index is lower, the composition of the underlying remains the same. At present the certificate is invested in six different digital currencies: Bitcoin, Ethereum, Cardano, Litecoin, Stellar and Polkadot. The two globally most important cyber currencies, Bitcoin and Ethereum, lead the way with shares of 30.8 and 29.7 per cent respectively. Cardano, the world's third largest cryptocurrency by market capitalisation, makes up around another fifth of the index. The remaining 17 per cent comprises Litecoin, Stellar and Polkadot. The index can contain no more than ten digital currencies. Since this is an actively managed certificate, holders of the certificate must expect charges. A charge of 0.35% p.a. is made for calculation, while the management fee comes to 1.00% p.a. The charges add up to a moderate – for an actively managed certificate – total of 1.5% p.a.
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.