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introduction:
Bitcoin Volatility Premium AMC, an innovative investment product, has become the largest actively managed financial product based solely on Bitcoin in Europe and the second largest globally. Despite this achievement, Bitcoin-only AMC has so far remained under the radar and has not received any media coverage yet. What makes this investment product's offering particularly interesting is that its meteoric rise was due to a $50 million seed investment made from an obscure Bitcoin miner early in 2010. The product was designed to reduce Bitcoin's volatile pricing, and boost its adoption as a reliable means of For trading. exchange.
What is AMC?
AMC stands for Actively Managed Certificate. It is a type of organized security that is very popular in Europe. Jurisdictions such as Luxembourg and Jersey allow asset managers to create these certificates in order to raise capital from investors. Certificates provide a “wrapper” for the investment strategy, or specific underlying asset. The certificate is sold to investors and the capital is used to implement the strategy.
Who is the mysterious whale?
In response to inquiries about the identity of the Bitcoin whale behind the new Bitcoin Volatility Premium AMCZeltner & Co. confirmed. That the initial investor is actually one of the first Bitcoin miners who have been involved in Bitcoin since 2010. However, out of respect for the investor's request to maintain privacy and avoid public scrutiny, Zeltner & Co. declined to comment. Reveal any other details about their identity. The motivations behind such a significant move by an individual with significant Bitcoin holdings are particularly interesting. The creation of the AMC, which aims to stabilize the price of Bitcoin, demonstrates a strategic approach to managing digital assets. By personally allocating their holdings to the development of this investment product, Bitcoin Whale not only addresses the problem of Bitcoin's volatility, but also enhances its viability as a stable medium of exchange. AMC stands out as a unique market-making instrument that not only seeks to manage risk but also differentiates itself through its operational approach, targeting a more stable and predictable market for Bitcoin.
Why is this AMC relevant?
Bitcoin Volatility Premium AMC has already become the largest actively managed financial product using only Bitcoin in Europe and the second largest globally after the Purpose Investments Bitcoin Yield ETF (BTCY), with over C$109 million (US$80,750). There are several large Bitcoin ETFs that actively manage futures positions, such as the ProShares Bitcoin Strategy ETF (BITO), with over $2.82 billion in assets under management; However, these funds are not actively managed in the traditional sense. Rather than trying to outperform or improve the risk/reward of a direct investment in Bitcoin, futures ETFs aim to track the price of Bitcoin 1:1.
The difference between an ETF and an AMC is that ETFs are passively managed. This means that they track the underlying assets. While AMCs are actively managed, meaning they attempt to outperform the underlying assets on either absolute return or risk-adjusted return.
Figure 1: Largest funds and structured products active for Bitcoin only
How is its investment strategy unique?
The certificate algorithmically invests in Bitcoin and USD, aiming to collect a volatility premium while improving the risk-return profile directly by investing in Bitcoin. The strategy provides liquidity to the BTC/USD spot market with market making on leading exchanges such as Kraken. This results in small gains, which can accumulate between 2% and 6% per year, depending on volatility. A volatility premium is created when the market moves from filling algorithm-generated buy orders to filling sell orders, and vice versa. The algorithm buys low and sells high at each low or high, respectively.
Figure 2: Bitcoin risk profile vs. Zeltner & Co. Bitcoin Volatility Premium
Similar to ETFs, as more investors invest in Bitcoin Volatility Premium AMC Certificates, the certificate should purchase more Bitcoin, thus increasing the demand for Bitcoin, which already exceeds the newly created daily supply by several factors. The target market making allocation is 70% BTC and 30% USD, meaning the strategy currently holds over 540 BTC.
Market impact and future prospects:
The goal of Bitcoin Volatility Premium AMC is to mitigate Bitcoin price fluctuations, making it a more stable and practical medium of exchange.
Dr. Demelza Hayes, portfolio manager at Zeltner & Co., shared insights with Bitcoin Magazine Pro:
“Bitcoin’s ability to become a global medium of exchange and money hinges greatly on achieving stable purchasing power. Currently, the inherent volatility of the price of Bitcoin poses an obstacle to its widespread adoption in daily transactions. However, if the value of Bitcoin stabilizes, it could To emerge as a viable alternative to traditional fiat currencies, offering benefits such as decentralization, security and lower transaction costs over Bitcoin scaling solutions such as Liquid, AQUA and Lightning Network.
By becoming the largest actively managed Bitcoin-only financial product in Europe and a major player globally, AMC is leveraging an algorithmic strategy to invest in Bitcoin and the US dollar. This strategy aims to take advantage of market volatility, which in turn affects Bitcoin demand and price dynamics.
Swiss Family Office Share:
This strategy is managed by the prestigious family office Zeltner & Co, headquartered in Zurich, Switzerland. Founded by Thomas Zeltner, Zeltner & Co. continues the legacy of Thomas's father, the late former head of UBS Wealth Management, Jörg Zeltner. Zeltner & Co., renowned for its reputation and expertise in wealth management, gave this project credibility, strengthening confidence in the strategy's legitimacy and potential for success.
Organizational and geographical advantage:
By choosing the Swiss city of Zurich as its headquarters, the CMA is taking advantage of the region's favorable regulatory environment and its reputation as a global center for finance and innovation. This strategic location enhances the security and attractiveness of Bitcoin Volatility Premium AMC for investors seeking diversification into digital assets.
Conclusion:
The launch of Bitcoin Volatility Premium AMC comes at a time of heightened interest, with Bitcoin recently surpassing all-time highs and capturing the attention of institutional investors and mainstream media alike. As the market continues to mature and attract more institutional participation, the emergence of innovative investment tools such as this certification highlights the evolving nature of digital asset management.
