21Shares Combines Bitcoin and Gold in Newest ETP

Product in Switzerland combines the traditional value of gold with the promising return rates of bitcoin


Blockworks exclusive art by axel rangel


key takeaways

  • The new exchange-traded product is designed to offer uncorrelated returns and wealth protection amid inflation
  • Its current allocations are 18.5% bitcoin and 81.5% gold

21Shares has continued its product launch spree as the firm, this time, has chosen to combine gold and bitcoin exposures.  

The world’s largest issuer of cryptocurrency exchange-traded products (ETPs) has teamed up with UK-based ByteTree Asset Management to list the 21Shares ByteTree BOLD ETP (BOLD) on the SIX Swiss Exchange.

The fund is designed to offer uncorrelated long-term returns and wealth protection in an inflationary environment, 21Shares said in a Wednesday statement. It tracks an index that rebalances monthly, with assets weighted in inverse proportion to their risk; the current allocations are 18.5% bitcoin and 81.5% gold. 

The ETP is the first of its kind and combines the traditional value of gold with the promising return rates of bitcoin — which many consider the new gold, according to 21Shares CEO Hany Rashwan.

“BOLD seeks to take away the hassle of personally managing the two assets while imposing a disciplined process when it comes to delivering higher risk-adjusted returns,” Rashwan told Blockworks. “We expect to see both retail and professional investors across Europe invest in BOLD as an easy way to gain exposure to cryptocurrencies.”

The Federal Reserve last month raised the benchmark interest rate a quarter percentage point in response to inflation rising at the fastest pace in four decades. The central bank signaled at the time there will be seven more rate hikes in 2022. 

“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,” ByteTree Asset Management CEO Charlie Erith said in a statement.

“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.”

The product comes to market after other issuers have sought to combine exposure to these assets in the same strategy. 

WisdomTree began allowing its Enhanced Commodity Strategy Fund (GCC) to allocate up to 5% of its net assets in bitcoin futures contracts last year. The fund also invests in the futures contracts of more than a dozen commodities, including gold.

Amplify ETFs launched its Inflation Fighter ETF (IWIN) in February, which offers exposure to a range of stocks, REITs, currencies and commodities, including gold and bitcoin. 

Fund group VanEck filed in December for an ETF that would invest in gold and bitcoin futures contracts, gold-linked instruments, and exchange-traded products that provide exposure to gold or bitcoin.

Nate Geraci, president of The ETF Store, questioned at the time who VanEck was marketing to, noting that “gold bugs and the bitcoin maxis tend to go at each other’s throats.”

Frank Holmes, executive chairman of HIVE Blockchain Technologies, said during a panel at the Exchange ETF conference earlier this month that gold “will always be there.” He noted, however, that millennials and certain “sophisticated” older investors are shifting from gold to bitcoin.

MicroStrategy CEO Michael Saylor agreed that gold will continue to be a non-sovereign store of value for certain investors, but added that 21st century ideas like bitcoin have the power to “turn the world upside down.”

21Shares has roughly $2.5 billion in assets under management. Its products are listed on 10 regulated European exchanges.The company has launched a handful of ETPs this year, including products with Aave (AAVE), Chainlink (LINK) and Uniswap (UNI) as their underlying assets. 21Shares expects to bring to market the first Australian ETFs to invest directly in bitcoin and ether this week.

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