Wednesday, October 28, 2020

Bitcoin Capital hopes to foster mass crypto adoption via its exchange-traded product

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Investment firm Bitcoin Capital hopes that its exchange-traded product will foster mass crypto adoption. The firm's Bitcoin Capital Active Exchange Traded Product, or BTCA, is traded on the Swiss Stock Exchange. It can discretionarily allocate funds to fifteen different cryptocurrencies and fiat. Daniel Diemers, one of the directors of FICAS, the company that manages the product, told Cointelegraph that these types of products are essential for the mass adoption of Bitcoin:

It is easy tradable. We have seen already here in Switzerland that some of the popular online banks like Swissquote, which is a bank based entirely in your smartphone. For them, it was easy to list the product. So if you're aligned with one of these online banks or you do online brokerage, it's very easy to find a product.

The fact that the manager can discretionarily allocate funds to both crypto and fiat gives it an advantage over similar products, said Diemers. He clarified that the team relies on four frameworks to optimize their portfolio: technical analysis, fundamentals, sentiment analysis, and what he calls an "agency model". The latter comes down to observing the behavior of other major players in the market. The allocation is publicly available and is updated monthly. Currently, almost 83% is invested in Bitcoin and 12% in Bitcoin Cash (BCH), with only a bit above 1% allocated to Ethereum (ETH).

The face value of BTCA is 100 Swiss franks, and currently trades at a 10% premium. In comparison, Grayscale's Bitcoin (BTC) Trust routinely commands a 20% premium in the over-the-counter market. This premium can be explained by the fact that it is more convenient for investors as they do not have to deal with wallets or custodians. They are also able to command such a markup due to the limited competition in the space.

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