Institutional investors are looking for ways to participate in the crypto market without having to step out of the regulatory space or master the advanced technology behind Bitcoin (Bitcoin), asset management companies are looking for alternative solutions to meet demand.
According to information shared with Cointelegraph, Paris-based investment management company Melanion Capital and index platform Bita have launched the Melanion Bitcoin Risk Index.
The index tracks a basket of beta-weighted stocks that has the highest correlation and income exposure to BTC to follow the performance of the largest cryptocurrency in the traditional investment fund format.
The announcement stated that the Melanion Bitcoin Risk Index aims to allow investors to “understand the daily price trend of Bitcoin through a diversified basket of stocks that meet the standards of traditional investment funds.” The index will enable banks and asset management companies to provide customers with bitcoin exposure in various packaging formats, such as investment funds, exchange-traded funds, certificates, or structured products that comply with European regulatory formats.
The index is based on European and North American companies operating or investing in the crypto sector, and is composed of the 30 companies most relevant to Bitcoin, and their weights are assigned accordingly. The liquidity filter and upper weight limit are used to ensure the stability and scalability of the index.
Remind that the perspective approach of European regulators makes most Bitcoin-backed exchange-traded products not eligible for institutional investors and funds. Melanion Capital President Jad Comair stated that the Melanion Bitcoin Risk Index narrows the gap between Bitcoin and EU regulation. gap. “The index is a true bridge between the two worlds,” he added.
Comair said that because it closely tracks the performance of BTC in a diversified basket and eliminates common risks such as loss or hacking, the index has its own set of advantages compared to direct investment in Bitcoin.
“Bitcoin’s main concern for institutional investors is hacking, theft, loss, storage, security or crime. By investing in stocks that replicate the performance of Bitcoin, investors can achieve a diversified asset allocation that was not possible before.”