Crypto Asset Industry to Benefit on the Skewness of Investment Risk in Market, Reveals 21Shares
ZURICH, April 7, 2020 /PRNewswire/ -- 21Shares, the first ETP issuer to deliver fully collateralized, passive investment products with cryptocurrencies as underlying assets, has published a joint research report with Binance which shows that adding a small allocation of BNB to a traditional investment portfolio can improve investors' returns despite the recent market drawdown.
BNB is the native token issued by the crypto exchange Binance, one of the largest and most profitable businesses in the entire crypto asset industry. Every quarter, Binance uses 20% of its profits to buy-and-burn the BNB tokens on the open market, thus limiting the circulating supply.
The report also shows that most analysis done on portfolio optimization with crypto assets has underestimated the impact of skewness and kurtosis. This can lead investors to drastically understate the probability of large extended drawdowns in both conventional and crypto asset markets, such as that experienced on March 12 (Bitcoin fell by around -30% in a single day). In fact, owing to large amounts of skewness and kurtosis, traditional portfolios and portfolios with crypto assets have returns that do not follow a normal distribution: they are generally negatively skewed. When BNB has had positively skewed returns over the last two years, it could have enabled investors to further hedge against the present downside tail risk, which is particularly pronounced in portfolios composed of negatively skewed assets.
In order to enable traditional investors, who are not familiar with the technical infrastructure of holding crypto assets, to access this novel asset class, 21Shares offers - amongst most other large crypto assets - the BNB token in a familiar ETP structure (ticker: ABNB) and admitted to listing under the name "21Shares Binance ETP" on the SIX Swiss Exchange in Switzerland.
Since the outbreak of the coronavirus, we have seen a significant uptick in client demand for crypto assets," says Hany Rashwan, CEO 21Shares. "It remains to be seen if crypto assets will indeed be a safe haven during this time of economic turmoil but early signs are positive."
Link to the full report can be found here: https://21shares.com/research/portfolio-optimization-with-bnb-with-binance-research
(Disclaimer can be found on the full report)
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Hansen Wang
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