Swissquote Bank Launches a Bitcoin Exchange Traded Certificate
The Bitcoin mania over the last year has really caught the attention of big financial institutions which are now considering this much-debated cryptocurrency as a potential investment option for the future. Several financial institutions are now considering to develop some good investment services and build financial products considering Bitcoins.
The Switzerland-based online banking service - Swissquote Group Holding SA - has launched Bitcoin exchange-traded certificate which will be traded, along with the company’s public shares, on six trading platforms. The basic purpose of this Bitcoin Active Certificate is to reduce volatility by switching the holdings between Bitcoin and the U.S Dollars.
In order to do this, a special machine learning algorithm has been employed that will shift funds between U.S Dollars (Cash) and the digital currency by using several “technical signals” and opinions on social media that helps to predict and forecast the market ahead.
In its official post, Swissquote writes: "Our strategy is focused on reducing volatility by increasing the amount of cash held during periods of uncertainty and downturns. This lower-volatility strategy is intended to decrease volatility to help create more consistent potential returns in the long run.”
The bank has further clarified that depending upon the level of confidence for Bitcoin in the market, as suggested by the algorithmic prediction, it will allocate 60-100 % of its portfolio in Bitcoins and the rest amount will automatically be held in U.S. Dollars. Additionally, the bank will also charge a 1.5% trading and management fees.
Head of market strategy at the bank, Peter Rosenstreich, told Bloomberg that “Investors are excited about the cryptocurrency but are unnerved by its volatility. So we tried to build a trading algorithm that’s a protection against downside risks.”
Note that this is not the first project by Swissquote in the cryptocurrency space. Earlier this year in July, the bank has announced a new bitcoin trading feature in partnership with popular cryptocurrency exchange Bitstamp. This service was basically to allow customers to exchange their Bitcoins with fiat currencies like U.S. Dollar and Euro directly through their accounts.
Several hedge funds, trading platforms and other financial institutions have joined the Bitcoin party by launching new Bitcoin products. This participation by financial institutions has certainly instilled a lot of confidence amongst investors, and is currently giving more strength to the Bitcoin rally as the most popular cryptocurrency has managed to surge past the $9000 mark hitting its new all-time high.
It all started this month after the announcement of CME Group launching Bitcoin Futures contract in the second week of December. Soon after this, Bitcoin has shown an unprecedented momentum of over 80% growth in its price, taking the overall cryptocurrency markets to record high valuations.
A popular crypto-hedge-fund manager and investor, Mike Novogratz, who has started his own $500 million cryptocurrency hedge fund has predicted that Bitcoin prices are all set to hit $10,000 and it seems that the milestone is not very far.