- Since joining the crypto industry in May, this is the first major expansion of S & P’s crypto benchmarking capabilities.
- It is not known which assets BDM and its subgroups use to create their market image.
- This methodology, according to S&P spokesperson Ray McConville, better describes asset appreciation over time
On Tuesday, S&P Dow Jones Indices announced the launch of five new cryptocurrency indices, marking the company’s first significant expansion of its digital asset benchmarking tools since entering the market in May. Since joining the crypto industry in May, this is the first major expansion of S & P’s crypto benchmarking capabilities. As institutional players grow increasingly interested in crypto, S&P Dow Jones unveiled an index on Tuesday that attempts to provide investors with a cohesive picture of the global crypto industry.
New S&P Dow Jones Indices
S&P Dow Jones Indices, the world’s largest index provider, announced on Tuesday the launch of five new cryptocurrency indices. There are now eight cryptocurrency indices available from the organization. The centerpiece of the wafer, according to a press release, is a Broad Digital Market Index, or BDM, which includes more than 240 cryptocurrencies. The new sub-indices also allow for multiple BDM slices and dice by market cap, according to an S&P spokesperson, allowing investors to watch different sections of the market. The S&P Cryptocurrency Broad Digital Market Index analyzes 240 cryptocurrencies with a market capitalization of over $ 10 million that meet a few inclusion criteria. S&P has already produced indices for bitcoin and ethereum, but the new metric will provide a broader perspective on the crypto economy.
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According to the S&P website, the index is designed to reflect a broad universe of investment. S & P’s crypto data partner Lukka did not immediately respond to the comment. HXRO is the 240th most valuable cryptocurrency in terms of market capitalization, however, it is not clear whether S&P standards are based on size. The S&P Cryptocurrency BDM Ex-Megacap Index is the second subset, which excludes members of the S&P Cryptocurrency Megacap Index. The performance of bitcoin and ethereum is measured by the mega-cap crypto index.
The index will be asymmetric towards the top. According to CoinMarketCap, bitcoin and ethereum account for 62.8% of the total crypto market, while the top ten cryptocurrencies represent 82%. Apple and Microsoft, the top two stocks in the S&P 500, only represent 11% of the index. The top ten stocks represent just over a quarter of the S&P 500, or 27.9%.
Another new index is the S&P Cryptocurrency BDM Ex-Largecap Index, which excludes components of the S&P Cryptocurrency Largecap Index. The S&P Cryptocurrency Large Cap Ex-Mega Cap Index, the fifth index, measures the performance of members of the S&P Cryptocurrency Largecap Index minus the constituents of the S&P Cryptocurrency Megacap Index.
These new indices join the three previous S&P Digital Market indices which were introduced in May. The three are the S&P Bitcoin Index, the S&P Ethereum Index, and the S&P Cryptocurrency Megacap Index. The addition of our family of digital market indices provides one of the biggest prospects to date for this fast growing asset class, with the ability to slice and slice by market capitalization, said Peter Roffman. , Global Head of Innovation and Strategy at S&P Dow Jones Indices. They are excited to offer the cryptocurrency market this additional level of openness.
S&P 500 movement indicates Wall Street interest
The product snapshot prospect mirrors Wall Street’s goal of bringing the Old West-style crypto markets together in a more digestible form. These newcomers, like S & P’s top three crypto indices, use points instead of prices to show market performance. According to S&P spokesperson Ray McConville, this methodology better describes asset appreciation over time. A methodological document published in July 2021 explains S & P’s mathematical approach for calculating index points.
The two major mega-cap coins have tended to keep pace with the larger crypto market. According to Insider’s research on the S&P crypto indices, the top 238 non-bitcoin and ethereum cryptocurrencies are closely related to an index that only includes bitcoin and ethereum. (Data from February 2017, when the indices started, were used and the correlation coefficient was 0.76.)
Broad Digital Market, Crypto LargeCap, BDM Ex-MegaCap (without bitcoin or ether), BDM Ex-LargeCap (without Large Caps) and Crypto LargeCap Ex-MegaCap are the new indices.