- Amun AG’s ETP has generated considerable interest from institutional investors
- A negative correlation exists between trading volume and Bitcoin’s price
- Investors buying ETP with a long-term perspective
The recently launched cryptocurrency exchange-traded product (ETP) on Switzerland’s SIX Swiss Exchange is witnessing tremendous interest from institutional investors during the prolonged bear market.
Strong Negative Correlation between Volume and Price
According to a recent Tweet by Su Zhu, CEO at FX Hedge Fund, the HODL ETP witnessed record volume on December 5, 2018, where shares volume reached figures close to 32 thousand.
Moreover, the latest Tweet by Zhu posits that last Thursday and Friday, the ETP created new volume records with 53,233 and 62,986 shares traded respectively. Interestingly enough, this occurred at a time when Bitcoin and Ether dropped to figures close to $3,200 and $80, respectively.
He further noted that there exists a strong negative correlation between the volume traded and price of the underlying crypto asset.
Last Thurs and Fri we broke volume records again on the Swiss HODL ETF with 53,233 shares and 62,986 shares traded respectively. That coincided with the dip in BTC to 3.2k and ETH to near 80. The correlation between volume and price continues to be very strong at (-68%). https://t.co/Meuaa9MXCV
— Su Zhu (@zhusu) December 11, 2018
These facts indicate that the current sorry state of crypto markets is not an indicator of the appetite for the emerging asset class among institutional investors.
It’s worth pointing out that many times people tend to use the terms ETP and ETF interchangeably. One of the stark differences between the two is that the former is not subjected to the Collective Investment Schemes Act (CISA), and is, therefore, not under the purview of Switzerland’s financial watchdog FINMA.
2019 Could Mark Institutional Investor’s Entry in Cryptocurrencies
BlockchainReporter reported on November 17, 2018, how cryptocurrency startup Amun AG was given the green-light in Switzerland to enlist their crypto ETP on SIX Swiss Exchange, Europe’s fourth-largest stock exchange.
The ETP allows institutional investors direct exposure to the top five cryptocurrencies by market volume, i.e. Bitcoin, Ether, XRP, Bitcoin Cash, and Litecoin.
Staying true to crypto ethos, the ETP trades on the exchange under the ticker HODL.
As pointed out by Zhu in his Tweet, a strong negative correlation of -68 percent implies that institutional investors trade a higher volume of ETP whenever the price of Bitcoin dips, and vice versa. Moreover, it was also noted that a very high percentage of the volume is in the form of net inflow, suggesting that the big players do not have any intention to cash out their holdings anytime soon.
With Bakkt, and Fidelity’s digital assets trading desk slated to go live during Q1 2019, one can expect more institutions turning their heads towards digital currencies.
