Bitcoin-Ethereum ETF: Is It Worth It?

A recent analysis detailed an equally weighted portfolio for the two largest crypto assets on the market to better understand the value proposition for investors.

The US Securities and Exchange Commission (SEC) has given the go-ahead for a spot Bitcoin–Ethereum exchange-traded fund (ETF), as reported by several media outlets on July 5, 2024.

The regulator had earlier confirmed receiving the 19b-4 filing for the Hashdex Nasdaq Crypto Index US ETF. The product will include the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, in its portfolio if it receives approval from the SEC, which is anticipated by March 2025.

An analysis by the Kaiko platform on July 5 was based on an assessment of the BTC and ETH portfolio during the 2021 rally and this year’s record highs. According to the survey, the yield could have been 58% in 2024.

“Analyzing an equally weighted Bitcoin and Ethereum portfolio during the 2021 rally and this year’s record highs in January, we found that it would have returned 58% in 2024, compared to 20,6% in 2021,” the survey highlighted.

Analyzing an equally weighted $ BTC and $ ETH portfolio during the 2021 bull run and this year’s record highs in January, we find that it would have yielded 58% in 2024, compared to 20.6% in 2021. pic.twitter.com/s6naS3AB7B

—Kaiko (@KaikoData) July 5, 2024

The analysis noted that traditional investors may be drawn to the ETF product combining Bitcoin and Ethereum due to the improved risk profile of a BTC/ETH portfolio, in addition to the returns.

“Using a 99% confidence interval for VaR, one of the most conservative levels used in traditional finance, we can see the daily profit and loss realized during the first quarter bull run. The BTC/ETH portfolio maintains a manageable level of risk and a balance of gains and losses. Assuming a 99% VaR of $10.000, statistically we will have $10.000 in losses 1 day out of every 100, which we see below.”

According to the analysts, VaR is a risk indicator that assigns a dollar value to potential portfolio losses and their probability.