(Advertisement) The oldest and arguably most important cryptocurrency – Bitcoin – has skyrocketed in value since its launch in 2008. This has caught the attention of investors. For those investors who want to participate in Bitcoin’s performance but do not want to invest directly in the cryptocurrency, Vontobel’s participation certificates on Bitcoin could be an interesting investment opportunity.
The certificates are easy to invest in and due to their subscription ratio, the certificates make investments in the performance of Bitcoin possible even with smaller amounts. Furthermore, with the certificates, the risk of possible losses of coins due to hacker attacks is not passed on to investors.
The price performance of the oldest cryptocurrency is quite impressive. Although this was partly characterized by strong upward and downward movements; but the interim price rallies, as they had been observed, for example, at the beginning of this year, are impressive. Interest in Bitcoin and the need to participate in its price development has grown steadily, both among private and institutional investors.
This is also shown by the latest news from Germany, according to which institutional investors will be allowed to invest in cryptocurrencies via so-called special funds from August. Thus, the share of cryptocurrencies in these special funds may now amount to 20 percent. If you extrapolate this, then up to 350 billion euros could flow into the crypto market based on the current fund volumes – so far, the crypto market comprises about 1.8 trillion euros. This could further boost the crypto market. However, it remains to be seen whether and to what extent such inflows will occur.
For investors who want to participate in the price performance of the cryptocurrency but do not want to invest directly in Bitcoin, Vontobel’s participation certificates offer an interesting investment opportunity.
New participation certificates on Bitcoin available
Back in April of this year, Vontobel launched a new participation certificate on Bitcoin to enable investors to easily participate in the performance of the Bitcoin price. The new participation certificate has a variable management fee of currently 3.75 percent, which is priced in daily on a pro rata basis. The cost structure of the new product reflects the increased regulatory capital requirements for the issuer group in Switzerland. However, the certificates also have other features: They are easy to invest in and, due to their subscription ratio, they make investments in the performance of Bitcoin possible even with smaller amounts. Vontobel waivest continues with the new certificates to pass on to the investor the risk of any cyber attack or theft of Coins that may be held as collateral under the terms of the certificate; the risk of possible losses of Coins due to hacker attacks is thus not passed on to the investor.
Without a wallet – without the risk of theft of Coins
Vontobel’s listed participation certificates allow investors to participate in the Bitcoin price trend without having to have access to a Bitcoin platform with a “wallet” themselves. This offers the advantage that the risk of losing Bitcoins due to hacker attacks, technical problems, improper handling or the failure of the Bitcoin custodian does not lie with you as an investor in the certificate.
Already investable in small amounts
Bitcoin is a phenomenon that has fascinated many investors unchanged for several years. Sometimes the large price jumps in both directions are also a reason why Bitcoin can be found more and more often in the economic news. In the past still affordable – today difficult to acquire for small investors, because a Bitcoin has become relatively “expensive” over the years. Currently, according to Coinmarketcap, the price is $47,698 (as of September 1, 2021) – and that’s not even the maximum amount. Bitcoin peaked at just under $60,000 per coin in May of this year (source: Coinmarketcap). Vontobel’s new participation certificates have a subscription ratio of 1:100. This ensures that participation in the price development of Bitcoin is already possible with smaller amounts.
Easy to trade
Bitcoin certificates are a prime example of how special markets and underlyings can be made accessible and investable. Thanks to the successful symbiosis of participation certificate and Bitcoin, investors have a securitized security for the digital currency Bitcoin at their fingertips, which integrates seamlessly into existing securities portfolios. The certificates can simply be traded on the stock exchange at the current bid/ask price. Under normal market circumstances, Vontobel provides the necessary liquidity for the certificates to be tradable.
From the old to the new
Vontobel is adapting its Bitcoin product offering to the current regulatory environment. The old Bitcoin participation certificates (ISIN DE000VL3TBC7 and DE000VL6LBC7) have therefore been terminated with effect from 10 September 2021. As an investor of the terminated certificates you now have two options:
- You can sell the old participation certificate on Bitcoin until 7 September 2021 at the currently applicable bid price via broker/house bank or stock exchange and invest in the new certificate issued by Vontobel to continue your investment on Bitcoin.
- Alternatively, you can wait and hold the terminated certificate until the termination date (10 September 2021). The official termination amount per certificate will beThe amount will be determined in accordance with the terms of the issue and paid out to you by 17 September 2021. This process is automatic if you do not sell your position before then. This ensures an investment in the Bitcoin product until 10 September 2021. Investors can then realize potential returns and reinvest them or a portion of them back into the new participation certificate.
As an investor, you should also pay particular attention to the following with regard to the new certificate
Market risk / price change risk: The value of the certificate can also fall significantly below the purchase price during the term due to the factors determining the market price if the value of the underlying asset Bitcoin falls. In the case of cryptocurrencies such as Bitcoin, a very high range and frequency of fluctuation (volatility) is still to be expected. There is no capital protection for the Certificate.
Issuer / creditworthiness risk: Investors are exposed to the risk that the issuer and guarantor may not be able to meet their obligations arising from the product and the guarantee – for example in the event of insolvency (illiquidity / overindebtedness) or an official order to take liquidation measures. In the event of a crisis of the guarantor, such an order by a resolution authority may also be issued in the run-up to insolvency proceedings. A total loss of the capital invested is possible. As a bond, the product is not subject to deposit protection.
Currency risk: Since the underlying for the certificate is the price of bitcoin in US dollars, the value of the certificate also depends on the development of the conversion rate between US dollars and euros.
Product Cost: The management fee in the Certificate reduces the performance of the Certificate compared to the Underlying.
Important notes: This information is neither investment advice nor an investment strategy or investment recommendation, but advertising.
Full details of the securities, in particular the structure and the risks associated with an investment, are described in the Base Prospectus, together with any supplements, and the relevant Final Terms. The Base Prospectus and the Final Terms constitute the sole binding sales document for the Securities. It is recommended that potential investors read these documents before making an investment decision in order to fully understand the potential risks and rewards of deciding to invest in the securities. The documents as well as the Key Information Document are published on the website of the Issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, at prospectus.vontobel.com and will be available for free distribution at the Issuer. The approval of the Prospectus is not to be construed as an endorsement of the securities offered or admitted to trading on a regulated market. The securities are products that are not simple and may be difficult to understand.
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