Swissquote Bank is an online banking service, is launching a bitcoin exchange-traded certificate that it will restrict the cryptocurrencies’ volatility.
The Bitcoin Active Certificate works by moving investor’s holdings between the bitcoin and U.S dollars with the help of machine learning algorithm that will forecast the short-term market movements using the technical indicators, buy/sell pressure and the analysis of social media sentiment.
“Our strategy is focused on reducing volatility by increasing the amount of cash held during periods of uncertainty and downturns. This lower-volatility strategy is intended to decrease volatility to help create more consistent potential returns in the long run.”
The bank also described that it will hold 6- to 100 percent of the portfolio for the bitcoin, depending on the level of the confidence its bitcoin price forecast, while the remainder is held in U.S dollars. Trading will be carried on the SIX Swiss Exchange.
Bloomberg reported as Peter Rosenstreich, head of the market strategy at the bank told:
“Investors are excited about the cryptocurrency but are unnerved by its volatility. So we tried to build a trading algorithm that’s a protection against downside risks.”
Especially, the new certificate isn’t bank’s first raid into the cryptocurrency space.
Back in July, Swissquote announced a new bitcoin trading feature by collaborating with the digital currency exchange Bitstamp. The service will allow customers to exchange the bitcoin for the euros and U.S dollars through their accounts.