An Overview of the Top Crypto Indexes
In recent years, the huge gap that had existed between traditional financial markets and digital assets has begun to shrink. Bitcoin (BTC), which was once perceived with skepticism and criticism, has slowly paved the way for other digital assets and accompanying networks. Cryptocurrencies have created a niche as an asset class that has become wildly popular among retail investors and has gained a foothold among professional investors as well.
With the changing mindsets of market participants and rising interest in digital assets among investors, there is a stronger need to bring transparency and standardization to the crypto world.
Here’s an overview of the cryptocurrency indexes launched by prominent institutions which can help achieve this objective.
Launched in February 2021, the Nasdaq Crypto Index (NCI) is designed to measure the performance of a diversified pool of digital assets. NCI currently has eight cryptocurrencies as its constituents; as of June 1, 2021, Bitcoin and Ethereum (ETH) together add to around 94% weightage, while the remaining is spread across Litecoin (LTC), Chainlink (LINK), Bitcoin Cash (BCH), Uniswap (UNI), Stellar Lumens (XLM) and Filecoin (FIL).
The NCI is dynamic in nature, broadly representative of the market, and readily trackable by investors. The index has December 1, 2020, as its inception date with a value of 1000. The index is rebalanced and reconstituted on a quarterly basis.
“We saw a gap in the digital asset space for an investment-grade, rules-based benchmark that can be as dynamic as the assets themselves. NCI was designed to ensure that it remains a flexible representation of the asset class as it evolves,” according to Stephen Koshansky, Nasdaq Head of Digital Asset Index Products & Research.
And some investors can follow along this index with an ETF. Launched in 2021, the Hashdex Crypto ETF, the world’s first cryptoasset-based ETF, tracks the Nasdaq Crypto Index on the Bermuda Stock Exchange (BSX). While that ETF is currently not available to the U.S. investors, Victory Capital Management (VCTR) has entered into an agreement with Nasdaq and Hashdex which gives them exclusive rights of private placement funds and other vehicles for U.S. investors based on the Nasdaq Crypto Index.
Nasdaq also launched separate Bitcoin (NQBTC) and Ethereum (NQETH) reference price Indexes on June 9, 2021.
The New York Stock Exchange Bitcoin Index (NYXBT) was launched in May 2015 with 237.03 as its base level, as it was not rebased historically to any specific level. At the time of its launch, the then NYSE Group President Thomas Farley said, “Bitcoin values are quickly becoming a data point that our customers want to follow as they consider transacting, trading or investing with this emerging asset class.” The NYSE Bitcoin Index aims to represent the value of one bitcoin in U.S. Dollars (USD) as of 16:00 hours London time each weekday.
In May 2021, S&P Dow Jones entered the crypto world with the launch of a new series of digital asset benchmarks:
- The S&P Bitcoin Index (SPBTC) which is designed to track the performance of Bitcoin. The index has set its first value data and base date set as January 1, 2014, with a base value of 100.
- The second is the S&P Ethereum Index (SPETH); Ethereum is the second largest cryptocurrency in terms of market capitalization. The first value data and base date for the index is set as January 1, 2016, with a base value of 100.
- S&P Cryptocurrency MegaCap (SPCMC) is the third index launched by S&P. It tracks the performance of Bitcoin and Ethereum weighted by market capitalization. The first value data and base date for the index is set as January 1, 2017, with a base value of 100.
The pricing and reference data related to cryptocurrencies for these indices is provided by Lukka.
"As cryptocurrency becomes more mainstream, investors now have access to reliable and transparent benchmarks backed by institutional quality pricing data. We look forward to further expanding our new family of Digital Market Indices and bringing much needed transparency to this exciting market," said Peter Roffman, Global Head of Innovation and Strategy at S&P Dow Jones Indices.
Other Crypto Indexes
In addition to the above, few other indices are (among many others):
- CMC Markets offers three indexes: All Crypto Index, Major Crypto Index and the Emerging Crypto Index.
- Bloomberg has its set of cryptocurrency indexes such as the Bloomberg Galaxy Crypto Index (BGCI).
- Cboe has collaborated with CoinRoutes to create a crypto index.
While cryptocurrencies are subject to massive price volatility and regulatory ambiguity, among other issues, they have drawn the fervent attention of huge numbers of investors, making it impossible to ignore. In short, crypto cannot be disregarded anymore, and these indexes will enable products around cryptocurrencies to launch and further expand their presence within the traditional financial ecosystem.
Disclaimer: Information on funds based on factsheets and company websites. The author has no position in the index mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.