Europe Launches the First Bitcoin and Gold Exchange-Traded Product

Europe has officially launched the first-ever exchange-traded product combining Bitcoin and gold. The products offer long-term rewards and inflation protection, at least in theory.

The physically-backed index product is known as the 21Shares ByteTree BOLD ETP (BOLD). It was envisioned by Swiss crypto ETP provider 21Shares and UK alternative investment provider ByteTree Asset Management.

The novel ETP aims to bring the best of the old and new worlds of finance. It happened by betting on the portfolio hedging power of gold and the strong returns of Bitcoin.

In comparison, gold is the less volatile of the two assets, and has a higher weight of 81.5% at launch, while Bitcoin weighs 18.5%. The ETP rebalances both exposures in inverse ratio to their risk each month to manage volatility and increase returns.

Charlie Erith, CEO of ByteTree Asset Management, stated:

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.

Many market participants are still skeptical of Bitcoin’s suitability as a potential barrier to inflation, specifically in light of the cryptocurrency’s negatively trending correlation with gold.

Meanwhile, the excitement around Bitcoin-linked ETPs peaked toward the end of 2021 with the launch of the first Bitcoin-linked ETF in the US. The ProShares Bitcoin Strategy ETF (BITO), made its impact as the second-most heavily traded fund at that time. Since then, the US SEC has frequently snubbed the idea of a physically-backed Bitcoin ETF.