Dual Bitcoin-Gold ETP to Start Trading in Europe
The new ETP outperformed both the S&P 500 and the NASDAQ 100 in backtesting.
- A new ETP will let investors go long on both physical gold and Bitcoin in a single fund.
- The 21Shares ByteTree Bold Index ETP outperformed both the S&P 500 and the NASDAQ 100 in backtesting.
- While cryptocurrency-based ETPs are commonplace in European markets, they have struggled to gain regulatory approval in the U.S.
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ByteTree Asset Management has announced a new exchange-traded product that combines gold and Bitcoin in a single fund.
The World’s First Gold-Bitcoin ETP
A new exchange-traded product is betting on both Bitcoin and gold.
ByteTree Asset Management will debut its new Gold-Bitcoin ETP Wednesday, letting investors go long on both physical and “digital” gold in a single fund. The 21Shares ByteTree Bold Index ETP will list on the SIX Swiss Exchange under the ticker BOLD.
The new ETP will rebalance its allocations of gold and Bitcoin every month based on its 360-day historic volatility. This results in the less volatile asset, gold, having a higher weighting to help maximize the product’s risk-adjusted returns. The ETP will likely have a 70-90% weighting of gold based on backtesting stretching back to 2016. “We are making Bitcoin an acceptable asset to hold and bringing gold into the 21st century,” said ByteTree CEO Charlie Morris.
To achieve its unique pairing, ByteTree had to split custodianship between Coinbase, who will handle the Bitcoin, and JPMorgan, who will take care of the gold. According to Morris, BOLD is the first ETP to have two independent custodians. Due to the complexity of using separate custodians, annual fees for the ETP sit at 1.49%. In comparison, the Fidelity’s Physical Bitcoin ETP charges 0.75%, while the largest U.S. gold ETF takes only 0.4% for its service.
Using ByteTree’s active rebalancing strategy, backtesting shows that the BOLD ETP would have outperformed both the S&P 500 and the NASDAQ 100 over the past seven years. While the S&P has returned 109% and the NASDAQ 215%, BOLD would have produced returns of over 500%.
ByteTree’s BOLD ETP marks the first time both gold and Bitcoin have been combined in a single fund; however, the idea of pairing the two assets is not a new one. Bridgewater Associates founder Ray Dalio has previously advocated investing in both gold and Bitcoin as early as 2020. Former BitMEX CEO Arthur Hayes has more recently predicted that a combination of gold and Bitcoin will prove a prudent investment in coming years.
While cryptocurrency-based exchange-traded products are commonplace in European markets, they have struggled to gain regulatory approval in the U.S. Despite the ProShares Bitcoin Futures ETF launching last October, the Securities and Exchange Commission has continued to reject applications for a true, spot-backed Bitcoin ETF.
Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.