Leonteq has launched a new crypto index family in collaboration with LIXX Index Innovation, with the goal of lowering the risk of loss when investing in crypto assets. The Leonteq Bitcoin Lock-In 80% Index is the first index in this family to be released.
A look at the price development of Bitcoin over the last few years demonstrates how risky – but also rewarding - Bitcoin investments can be. Investing in Bitcoin in January 2013 until today would have resulted in several temporary losses of up to -80%, despite a generally positive price trend of Bitcoin over the same period.
Leonteq has created an innovative index concept to better manage the risk of loss when investing in crypto assets. In the case of the Leonteq Bitcoin Lock-In 80% Index, approximately 80% of the 1-year historical index peak is kept in a cash reserve, while the rest is invested in Bitcoin. LIXX as index administrator monitors the allocation daily and adjusts the weightings to cash reserve and Bitcoin if new index peaks are recorded. To avoid excessive trading and the costs associated with it, the cash reserve is only adjusted if the required rebalancing exceeds one percent of the current index level.
The Leonteq Bitcoin Lock-In 80% Index is designed in such a way that the maximum risk of loss over a 1-year period is limited to approximately 20 percent (however, there may be several consecutive 1-year loss periods, so that index losses of more than 20 percent are possible over several years).
The index concept was specifically designed for risk-averse investors: while the index only dynamically invests a portion of its funds in Bitcoin, foregoing potential gains, it has historically achieved a significantly better risk-reward ratio than a direct investment in Bitcoin.
At the same time, Leonteq and LIXX Index Innovation offer customized index versions to institutional clients such as asset managers, family offices and banks based on their specific risk tolerances.
Tino Wendisch, Head Crypto Offering at Leonteq, stated: “Investing in crypto assets can be painful at times and this novel concept assists in managing the risk of loss. This index concept is a toolbox for customizing risk exposure to a volatile asset class and it provides an additional investment option for investors. We are excited to be collaborating with LIXX to bring this novel index concept to investors.”
At the same time, Leonteq announces that it has increased its crypto universe by another four crypto assets: ApeCoin, Chiliz, Decentraland and Enjin Coin and offers now a total of 30 crypto assets on its platform.
As a leading provider of innovative investment solutions, Leonteq has pioneered the offering of structured products on crypto assets in Switzerland since 2017. Leonteq offered its clients the world’s first short tracker certificate on Bitcoin in 2017, the first exchange traded actively managed strategy on crypto assets in 2018 as well as the world’s first reverse convertible on Bitcoin in 2019. Leonteq has also won the Swiss Derivative Award for alternative underlyings two years in a row. Leonteq is the market leader in the DACH region for offering crypto assets in a securitized format.
LeonteqLeonteq is a Swiss fintech company with a leading marketplace for structured investment solutions. Based on proprietary modern technology, the company offers derivative investment products and services and predominantly covers the capital protection, yield enhancement and participation product classes. Leonteq acts as both a direct issuer of its own products and as a partner to other financial institutions. Leonteq further enables life insurance companies and banks to produce capital-efficient, unit-linked pension products with guarantees. The company has offices and subsidiaries in 13 countries, through which it serves over 50 markets. Leonteq AG is listed on the SIX Swiss Exchange (SIX: LEON).
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