Coinmarketcap, an online platform for displaying market data of more than 2000 coins or tokens, and Solactive, a German company specializing in producing indices will launch crypto indexes on March 4, 2019. This was declared by Coinmarketcap’s Head of Business Development, Emily Hurd, at the Crypto Assets Conference of the Frankfurt School of Finance & Management.
What are indexes?
An index is a benchmark for a particular well-defined group of assets such as equities. The elements of the group are weighted. The result is a key figure that should provide as accurate information as possible about the development of the entire group. The DAX (German Stock Index) is a well-known example. It has 30 members (the largest AGs in Germany) and provides information about the stock performance of these companies. In addition to the scale function, an index also allows people to invest in the defined group. Investors simply put on the index rather than individually on each member of the group. In addition, the investment is standardized for the investor.
In other words, an index is an analysis of a segment of the crypto market. It is calculated from the prices of selected cryptocurrencies (typically a weighted mean). It is a mechanism utilized by investors and commercial supervisors to define the market and to analyze the tabulation on particular properties.
Which indices will be introduced by coinmarketcap and Solactive?
Solactive will introduce two crypto indexes in collaboration with the US cryptocurrency information portal Coinmarketcap. In a first step, two indices will be developed on the two hundred largest cryptocurrencies on Coinmarketcap, such as the currently prevalent leading cryptocurrency bitcoin and one without bitcoin. According to Hurd, trading on “major international stock exchanges” is listed for 4 March. In a second step, as per Solactive, investable indices will be started depending on the market.
These could in policy outline the foundation for a European crypto-futures contract, how the derivatives trade Eurex is monitoring it. According to Solacrive, the indices they manage satisfy the conditions of benchmark direction and can, therefore, be utilized as a source for commercial tools in the EU. Sample and range of application are accepted in specific predicaments with the licensee. Solactive is a Mifid II certified benchmark manager under the Financial Market Regulation.
Just a few days ago, Nasdaq stock exchange had associated with New Zealand based Blockchain data company Brave New Coin to add Bitcoin (BTC) and Ethereum (ETH) indexes. The second largest stock exchange in the world declared on its website that it will send real-time Bitcoin and Ethereum index level data on the Nasdaq Global Index Data ServiceSM (GIDS) from February 25th.
The two indexes are Bitcoin Liquid Index (BLX) and the Ethereum Liquid Index (ELX). They both are planned to present a real-time scene or implication rate for the price of 1 BTC and 1 ETH respectively, priced in USD, and based on the most liquid outcomes of their markets. Both indices are determined by applying a methodology that has been separately examined against important IOSCO policies. The BLX is one of the most popularly referenced BTC indices among crypto merchants and has been estimated back to 2010. Furthermore, the ELX has been calculated back to 2014.
To date, these bitcoin futures are the broader market’s only idea, regulated crypto investments. With beliefs of growing the crypto market’s institutional-tier contributions in 2018, the trade remains to seek U.S. Securities and Exchange Commission permission for a bitcoin ETF, an investment medium that many thinks could attract capital from Wall Street to invest undeviatingly into bitcoin.
In the year 2017, Solactive started a Bitcoin Front Month Rolling Futures 5D Index exhibiting the progress of the Bitcoin futures recorded on the US derivatives exchange CBOE. Crypto futures are also exchanged on the US derivatives exchange CME. Nevertheless, the dealing capacity in these exchange-traded agreements has been fairly subdued so far.
Disclaimer: This information should not be interpreted as an endorsement of any cryptocurrency. It is not a recommendation to trade. The cryptocurrency market is full of surprises and overhyped assets. Do your research before buying anything. Do not invest more than you can afford to lose.