A New Crypto Market Trend – Cryptocurrency Indices

A New Crypto Market Trend – Cryptocurrency Indices

With the total number of cryptocurrencies and digital assets on exchanges skyrocketing from 617 to 1,335 over the course of a year, 2017 has been dubbed the “Year of Cryptocurrency”. However, as these currencies exist on numerous exchanges and markets, all with different payment systems and methods, the ability to get in and out of positions has been difficult, time-consuming and potentially costly as timing is crucial when it comes to trading on the crypto market. Many investors, curious to dip a toe into the new asset class were scared off by this complexity and associated risk exposure.

Why we need Crypto indices?

Similar to traditional markets, the creation of indices allows the old-world finance markets to start viewing the new world currencies as a serious and viable investment opportunity.

By creating an index that is in the exciting and vibrant cryptocurrency space, while adopting a methodology that takes into account the needs and requirements of heavily regulated asset managers, banks, hedge funds and professional investors, opens the possibility of creating a much wider investor base in the cryptocurrency ecosystem.Similar to traditional markets, the creation of indices allows the old-world finance markets to start viewing the new world currencies as a serious and viable investment opportunity.

By creating an index that is in the exciting and vibrant cryptocurrency space, while adopting a methodology that takes into account the needs and requirements of heavily regulated asset managers, banks, hedge funds and professional investors, opens the possibility of creating a much wider investor base in the cryptocurrency ecosystem.

Creating a cryptocurrency index is not enough, it is also important to factor in the regulatory and compliance requirements, as many sophisticated old-school investors are bound by them, and would prefer to have the same kind of clarity (or complexity) when it comes to new asset classes. Contracts created and listed, based on a well- thought out index will provide a simple, well understood and proven method for the financial community to consider the rapidly rising cryptocurrency ecosystem as a whole.

Multiple listings on both existing financial exchanges such as Eurex, or CME will allow the investor base to use current Fiat currencies to clear through existing clearinghouses using current risk, compliance, middle and back-office systems. In doing so, the index can be integrated into the trading and investment community in a relatively short span of time.

Crypto Indices are Increasingly being Produced

Some of the examples that show how mainstream financial players are listing the crypto index include:

Financial monitoring service Bloomberg Terminal, now hosting the Huobi 10 Cryptocurrency Index, as well as 9 crypto trading pairs
Toronto Stock Exchange is now listing the new Blockchain ETF
Leading U.S. investment banking group Goldman Sachs is exploring cryptocurrency derivatives, as stated by Goldman Sachs Chief Operating Officer (COO)
Canadian mass media and information company Thomson Reuters is now tracking the top 100 currencies in its sentiment data tool.
Given the huge weight of regulation that has landed on the financial community since the financial crisis, getting an index of high quality meeting regulatory standards such as the IOSCO Principles of Benchmarks, is vital for any chance of adoption by financial institutions.

Source: News BTC

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