One of the most debated topics in the financial world today is which asset provides the best protection against inflation. You know the feeling — a KitKat Chunky can cost almost as much now as a two-room apartment did five years ago.
Traditional investors still maintain that gold is the ultimate hedge, the classic way to protect against a falling currency. After all, the precious metal has been valued by nearly every human culture throughout history and has stood the test of time. Yet returns since the post‑GFC rally have been modest at best — only about 21% over the past ten years.
On the other hand, more iconoclastic investors point to a newcomer whose first name is Bit and last name is Coin. Is Bitcoin digital gold? Is it a better store of value than the original king, gold? Bulls argue that Bitcoin’s strong outperformance of gold over the last decade proves its superiority. But amid the highest inflationary environment in recent memory, gold is up roughly 3% year‑to‑date while Bitcoin is down about 17%. So, what’s really going on?
How about both?
The good news is that investors don’t necessarily have to choose. A new exchange‑traded product launched on the Swiss SIX exchange combines Bitcoin and gold in a single instrument. It is the world’s first combined gold/Bitcoin exchange‑traded product, developed by crypto‑ETF provider 21Shares in partnership with crypto data manager ByteTree Asset Management.
Even the ticker blends the two assets — FET. The issuers say the ETP will provide “protection against inflation and deliver optimized risk‑adjusted exposure to Bitcoin and gold.” The allocation is 81.5% gold and 18.5% Bitcoin, and the product will “rebalance monthly according to each asset’s inverse historical volatility.”
“BOLD seeks to remove the hassle of individual management of the two assets while imposing a disciplined process to deliver superior risk‑adjusted returns,” said 21Shares CEO Hany Rashwan.
Asset characteristics
The concept is interesting. Of course, investors could simply buy gold and Bitcoin in their preferred proportions, as is often the case with many ETPs. But the product offers automated, straightforward exposure to both assets, and the risk‑weighted adjustment is a valuable feature. It may also make it easier for some institutions to gain Bitcoin exposure, since regulatory hurdles for cryptocurrency remain in place for several entities.
Beginners can rotate into assets outside the traditional equity/fixed‑income sphere, two areas that have been hit hard in a high‑inflation environment. Equities and bonds, which frequently show negative correlation, have both struggled recently — a pattern that often emerges when inflation rises beyond manageable levels.
With many investors still wary of Bitcoin and hesitant to embrace its volatility, the BOLD ETP offers a moderate path to Bitcoin exposure. Pairing Bitcoin’s high risk/reward profile with gold’s more conservative price behavior makes the product an understandable launch for 21Shares — representing the 30th digital‑asset ETP the innovative firm has brought to market.