The cryptocurrency derivatives market is booming right now and if you are watching the markets you may have noticed a trend in which institutions are slowly beginning to take part in trading cryptocurrencies.
Enabling this phenomenon are innovative companies such as the Intercontinental Exchange (ICE) and the CME in the United States and Amun AG representing Europe. Amun is a Fintech company that has grown particularly popular in the recent past due to its portfolio of cryptocurrency derivative products it has launched on the premier Switzerland stock exchange SIX and Germany’s Borse Stuttgart. The company has launched 10 exchange-traded products (ETPs) tracking the price of various assets such as Bitcoin, Ethereum, Ripple or a basket of assets.
On Thursday, the company launched yet another asset and this time the ETP is a bit interesting. The 21Shares Short Bitcoin ETP (SBTC) is the first inverse ETP which means that the price of the ETP rise with a falling price of its underlying asset (in this case Bitcoin.) this is a tool for the market bears or simply people who want to short bitcoin. In addition, the SBTC does not offer margin trading so it’s as simple as it gets. If you buy $10 worth of the SBTC on SIX and Bitcoin price falls by 10%, you actually gain 10% on your stock and vice versa. So basically, with the SBTC you gain when the price of Bitcoin falls and you lose if it goes the other way.
“If you’ve ever tried trading options or futures, you’ll see that it’s pretty difficult. It’s not the easiest thing which is why it’s just easier to say ‘I think bitcoin price will go down, I’m going to buy this stock,’” Amun co-founder and CEO Hany Rashwan said in a telephone interview with an industry media on Thursday.
Speaking to yet another publication, Rashwan pointed to the fact that an inverse ETP is not a new concept and that it already exists for the traditional markets. However, for the Bitcoin market, the SBTC is “the world’s first.” “We are starting with a simple inverse product, but more product types and strategies are coming,” he added.
Amun also decided to rename all of its ETPs to include the words 21Shares. The number 21 is a tribute to the total Bitcoin coins that will be mined which are 21 million. “We wanted to differentiate traditional financial ETPs from our crypto native products,” Rashwan explained the rebranding.