21Shares, a provider of cryptocurrency ETPs, has just announced the launch of Bitcoin and Ethereum-based products on the SIX Swiss Exchange with a built-in target volatility limit of 40%.
According to the company, the parameter is achieved through dynamic rebalancing on a daily basis. As volatility increases, the proportion of US dollar cash increases, with its reduction as it returns to a calmer flow of crypto asset trading.
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The instruments, 21Shares S&P Risk Controlled Bitcoin Index ETP (SPBTC) and 21Shares S&P Risk Controlled Ethereum Index ETP (SPETH), actually replicate the respective Standard & Poor's indices.
The head of ETPs at 21Shares, Arthur Krause, has said the historical volatility of large-cap stocks on Wall Street is 20%, while for Bitcoin and Ethereum it is 70% and 80%, respectively.
He has explained:
"The ETPs combine exposure to a volatile cryptocurrency with cash — which has zero volatility — to attempt to achieve the overall target of moderate volatility."