Deutsche Digital Assets (DDA), a German crypto asset management firm, has expanded its Bitcoin exchange-traded product (ETP) lineup with the launch of its DDA Bitcoin Macro ETP (BMAC) on Euronext Paris. This marks the second listing for the ETP, following its initial debut on Xetra, Deutsche Börse’s electronic trading platform.
A New Approach to Bitcoin Investment
The DDA Bitcoin Macro ETP is fully physically backed by a basket of cryptocurrencies, mirroring the Compass FT DDA Bitcoin Macro Allocation Index (DDAMACRO). The ETP is securely stored in cold custody at Coinbase Custody International Ltd., a regulated custodian. With a total expense ratio (TER) of 2%, this ETP offers a distinctive approach to Bitcoin investment by seeking to balance returns with protection against adverse macroeconomic conditions.
Dominik Poiger, Chief Product Officer of DDA, emphasized the unique nature of this product, stating:
“The Bitcoin Macro ETP is not just another cryptocurrency in an ETP wrapper. It offers exposure to Bitcoin while trying to safeguard against unfavorable macro environments.”
The launch of BMAC on Euronext Paris broadens DDA’s presence in the European crypto ETP market, adding to its existing offerings such as DDA Physical Bitcoin ETP (XBTI), DDA Physical Ethereum ETP (IETH), and DDA Crypto Select 10 ETP (SLCT).
Dynamic Exposure to Bitcoin and US Dollar Coin (USDC)
The DDA Bitcoin Macro ETP is unique in that it tracks the Compass FT DDA Bitcoin Macro Allocation Index, which employs a quantitative model to adjust allocations between Bitcoin (BTC) and USD Coin (USDC), a stablecoin pegged to the U.S. dollar. The model assesses four key macroeconomic factors:
- Global Growth – Linked to assets like U.S. cyclical equities and high-yield bonds, which are sensitive to global economic growth.
- Monetary Policy – Tied to assets affected by U.S. monetary policy shifts, such as gold and emerging market bonds.
- U.S. Dollar – Reflects changes in exchange rates related to the U.S. dollar.
- Eurozone Risk – Assesses risks associated with the European Monetary Union, including factors like Italian sovereign spreads and the CHF/GBP exchange rate.
These factors are represented by baskets of assets most sensitive to their respective indicators. The model uses a momentum score for each factor to generate sub-signals, which are weighted based on their influence on Bitcoin’s price over a six-month period. This approach helps determine the optimal allocation between Bitcoin and USD Coin based on market conditions. In risk-on environments, the strategy shifts towards Bitcoin, while in risk-off scenarios, it increases allocation to USD Coin to mitigate volatility and preserve capital.
This dynamic strategy offers a potential solution for investors seeking Bitcoin exposure with risk management, aiming to balance the high potential returns of Bitcoin with lower volatility.
Europe’s Crypto ETP Market Continues to Grow
While the U.S. is gaining attention with its Bitcoin and Ether ETF approvals, Europe has been a leader in the crypto ETP space for years. Asset managers like 21Shares, WisdomTree, ETC Group, Valour, and Fidelity have listed various cryptocurrency ETPs, offering exposure to assets like Bitcoin and Ether (ETH).
As of June 2023, Europe’s crypto ETP market boasted approximately $12 billion in assets under management (AUM), according to Trackinsight. However, North America still holds the top spot as the dominant market for crypto ETPs.
DDA’s innovative approach with the BMAC ETP demonstrates the continued evolution of crypto investment products in Europe, providing investors with more options to manage risk while participating in the growing digital asset market.
