Bloomberg Launches Cryptocurrency Benchmark Index
Bloomberg has launched the Bloomberg Galaxy Crypto Index that will track the performance of the top, most liquid cryptocurrencies. The initiative is being undertaken in collaboration with Galaxy Digital Capital Management, an asset management firm.
The index similar to the Dow Jones which measures the general health of the stock market will track up to a maximum of 12 cryptocurrencies. 10 cryptos including Bitcoin, Monero, Ethereum, Bitcoin Cash, Ethereum Classic, Zcash and Ripple are currently included.
The index is designed to track the performance of the largest, most liquid portion of the cryptocurrency market, Bloomberg and Galaxy Digital Capital Management said in a statement.
“The creation of the index marks an important step in the evolution of the digital assets space, facilitating diversified exposure as well as independent benchmarking for investors,” the two companies said.
The index will be rebalanced and reconstituted every month and will have a range of between 1% and 30%. The BCGI index uses a rules-based methodology. The base value was set at 1000 points at launch on May 3.
Cryptocurrency indexes are still few but growing in tandem with the market. Bloomberg is, however, the biggest entrant so far into the market. It also lends some credibility to a market that has so far been shunned by mainstream players.
Goldman Sachs is establishing a trading desk and NYSE’s parent company is planning a cryptocurrency exchange. The entry of these large institutional investors could usher in some stability to an otherwise highly volatile market.
Other indexes include the Cryptocurrency Index 30 (CCi30) which tracks the top 30 digital currencies by market capitalisation. Like the BGCI, this index is rebalanced monthly.
CRypto Index is another notable one which uses a statistical methodology to track cryptocurrencies. Bitcoin and Ethereum were weighted at 30% at the inception of the index, Ripple at 14.14% and Bitcoin Cash at 10.65%. Zcash is weighted at 1%.
Current Cryptocurrency Weightings
Bitcoin Cash 10.65%
Ethereum Classic 1.00%
“The index brings our rigorous approach to index construction to cryptos and will provide investors with a transparent benchmark to gauge the performance of the broader market,” Bloomberg’s global product manager for indices Alan Campbell said.
According to Campbell, the launch reflects a growing interest in cryptocurrencies among its clients.
“The Bloomberg Galaxy Crypto Index brings unprecedented transparency to the crypto markets. We are excited to help drive the decentralized revolution forward through the creation of BGCI.” Michael Novogratz, CEO Galaxy Digital Capital Management said.