An exchange-traded product combining Bitcoin and gold has been launched in Europe. The issuers of the ETP believe that with the current widespread inflationary woes, the investment vehicle will provide investors with an avenue to protect their assets and receive substantial returns.
The BOLD ETP
A brainchild of Swiss ETP provider 21Shares and U.K. wealth managers ByteTree Asset Management, the revolutionary 21Shares ByteTree BOLD ETP is the first to combine Bitcoin and gold. Both parties revealed in a statement that the ETP is a spot product aimed at combining the best of both worlds, referring to gold’s position as the preferred store of value for TradFi and the similar belief held about Bitcoin amongst crypto enthusiasts.
Inflation has reached record levels in various countries in Europe, following long periods of fiat printing and low-interest rates, a situation now heightened by the supply bottle-neck due to the Ukraine crisis. According to the ETP issuers, investors stand to benefit from an investment vehicle like this which combines the inflation hedging potential of gold and the upside potential of Bitcoin in this time of rising inflation.
Commenting on the reasoning behind the issuance of the ETP, ByteTree Chief Charlie Erith said, “Gold has historically delivered portfolio protection in inflationary environments, while Bitcoin is the digital equivalent of gold with growing adoption by investors as a distinct asset class and a core store of wealth.” Erith further said, “In a time of rising structural inflation and heightened geopolitical risk, we believe this can act as an important risk and return diversifier in a balanced portfolio.”
Gold will dominate the index composition at launch with 81.5%, while Bitcoin will make up the remaining 18.5%. While this might be the case at launch, ByteTree and 21Shares, have revealed that the BOLD ETP index will automatically adjust its composition every month based on the relative volatility of the assets. The less volatile the asset is, the more exposure investors get to that asset.
The Bold ETP is the latest in 70 approved crypto ETPs in Europe, a sharp contrast to the situation in the U.S. Notably, 21Shares, one of the issuers of the ETP, less than three weeks ago had an application for a spot Bitcoin ETF product in the U.S. rejected. The situation perfectly highlights concerns raised by T.V. personality and billionaire investor Kevin O’Leary.
Could The BOLD ETP Help Further The Narrative Of Bitcoin As Digital Gold?
As reported severally in the last couple of weeks, Bitcoin continues to trade like a risk-on asset despite proponents’ claims that it is an even better store of value than gold. Moreover, the correlation between gold and Bitcoin over the last 50 days shows a large negative correlation rating of -4, signaling that both assets are moving in opposite directions.
Several pundits believe that this is because the narrative of Bitcoin as a store of value is still yet to get sufficient penetration among institutional investors. However, by combining both assets in a single investment vehicle, 21Shares and ByteTree could be looking to push this narrative further and help decouple Bitcoin from the Nasdaq. Bitcoin is currently trading around the $38k price point.
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