The first-ever exchange-traded product combining Bitcoin and Gold has launched in Europe, offering long-term rewards and inflation protection, at least in theory, Bloomberg reports.
The physically-backed index product is known as the 21Shares ByteTree BOLD ETP (ticker BOLD). It was conceptualized by Swiss crypto ETP provider 21Shares and U.K. alternative investment provider ByteTree Asset Management.
What happened: According to the issuing parties, the novel ETP aims to bring together “the best of the old and new worlds of finance” by betting on the portfolio hedging power of Gold and the “strong” returns of the most well-known crypto token.
Gold, the less volatile of the two assets, has a higher weighting of 81.5% at launch, while Bitcoin weighs 18.5%. The ETP rebalances both exposures in inverse proportion to their risk each month to manage volatility and increase returns.
Why it’s Important: “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. 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,” stated Charlie Erith, CEO of ByteTree Asset Management.
Many market participants are still wary of Bitcoin’s suitability as a potential hedge for inflation, especially in light of the cryptocurrency’s negatively trending correlation with Gold.
