Like it or not, cryptocurrencies are going mainstream. Just recently, Bloomberg launched its very first crypto index to make it easier for investors to keep up with the market movements. So instead of reading a news article about appreciation or depreciation of some digital asset, investors will be able to just take a look at one constantly updated number to get the idea where the market is heading. The name of the new index is…
Bloomberg Galaxy Crypto Index (BGCI)
And it is a result of Bloomberg’s work with Galaxy Digital Capital Management LP, which is a leading digital asset management firm founded by Michael Novogratz.
The index is designed to track the performance of the largest, most liquid portion of the cryptocurrency market, measuring the performance of ten USD-traded cryptocurrencies, such as Bitcoin, Ethereum, Monero, Ripple, and Zcash. Its constituents are diversified across different categories of digital assets — including stores of value, mediums of exchange, smart contract protocols, and privacy assets.
The BGCI, according to the press release, “marks an important step in the evolution of the digital assets space.” It utilizes a rules-based methodology and data from sources that have passed both Bloomberg and Galaxy Digital Capital Management’s due diligence processes.
The index is owned and administered by Bloomberg Index Services Limited and is co-branded with Galaxy Digital Capital Management.
“Today’s launch of the Bloomberg Galaxy Crypto Index reflects our clients’ growing interest in cryptocurrencies,” Alan Campbell, Global Product Manager for Bloomberg Indices, said in a statement. “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.”
Galaxy Digital Capital Management’s CEO and Founder, Michael Novogratz, is also pleased with the deal, saying that it will bring “unprecedented transparency to the crypto markets.”
He added: “We are excited to help drive the decentralized revolution forward through the creation of BGCI.”
The BGCI contains the following ten cryptocurrencies:
- Bitcoin – 30.00%
- Ethereum – 30.00%
- Ripple – 14.14%
- Bitcoin Cash – 10.65%
- EOS – 6.11%
- Litecoin – 3.77%
- Dash – 1.67%
- Monero – 1.66%
- Ethereum Classic – 1.00%
- Zcash – 1.00%
And it may be updated in the future with the changes in the market.
Not the first crypto index, though
For what it matters, Bloomberg is not the first company to launch a crypto index, though it is by far the biggest and most important player to do so.
Earlier this year, the popular digital currency exchange Coinbase announced the Coinbase Index Fund and as part of it – the Coinbase Index, which tracks the overall performance of the digital assets listed on Coinbase’s Exchange, GDAX (now Coinbase Pro). Similarly to what Bloomberg is doing, Coinbase is also weighting assets by market capitalization, with index level taking into account the ongoing increases in supply of each asset, not just changes in price.
The Coinbase Index level is calculated by dividing the current combined USD market capitalization of all constituent assets by the market capitalization as of January 1, 2015, the starting date for the Index. It is also reconstituted each time a new asset is listed on GDAX.
In addition to being a useful benchmark for the overall crypto market, Coinbase Index is also handy for US-resident, accredited investors interested in putting a portion of their money in cryptocurrencies. It lets them easily buy into all digital asset classes, without having to pick and choose. That, we think, will help this market thrive in the long run…