Dynamic Exposure to Bitcoin and USD Coin
The DDA Bitcoin Macro ETP tracks the Compass FT DDA Bitcoin Macro Allocation Index, which employs a quantitative model to assess real-time macroeconomic factors and determine the optimal allocation between Bitcoin (BTC) and USD Coin (USDC), a stablecoin pegged to the U.S. dollar.
The index’s quantitative model analyzes four key macroeconomic factors:
- Global Growth: This factor is linked to assets sensitive to global economic growth, such as U.S. cyclical equities and high-yield bonds.
- Monetary Policy: This factor is associated with assets that are affected by U.S. monetary policy changes, like emerging market sovereign bonds and gold.
- U.S. Dollar: This factor is related to exchange rates involving the U.S. dollar.
- Eurozone Risk: This factor is connected to assets that may be impacted by risks associated with the European Monetary Union, such as Italian sovereign spreads and the CHF/GBP exchange rate.
Each factor is represented by a basket of assets that are most sensitive to that particular factor.
The model calculates a momentum score for each factor, which is then used to generate individual sub-signals. These sub-signals are weighted based on their explanatory power for Bitcoin price movements over a 6-month rolling window, culminating in a final investment signal.
In risk-on macroeconomic environments, the strategy will invest more in Bitcoin, while in risk-off environments, it will shift its focus to USD Coin to protect capital. This approach is especially suitable for investors concerned about the volatility of Bitcoin and other cryptocurrencies. By balancing potential high returns with risk management, it offers a more cautious investment strategy.
A Surge in European Crypto ETPs
While the U.S. market was making headlines with its spot Bitcoin and Ether exchange-traded funds (ETFs) approvals, Europe has long been a pioneer in the crypto ETP space. Numerous asset managers like 21Shares, WisdomTree, ETC Group, Valour and Fidelity have successfully listed various cryptocurrency ETPs over the years, providing investors with exposure to Bitcoin, Ether (ETH), and other digital assets.
As of June 28, Europe’s crypto ETP market had a total asset under management (AUM) of approximately $12 billion, according to Trackinsight. However, despite this substantial figure, it’s worth noting that North America remains the dominant market for crypto ETPs.