BackS&P Dow Jones launches three indices tied to bitcoin, ethereum
The index provider had last year announced that it would launch cryptocurrency indices in 2021 with the coverage of up to 550 digital assets
PremiumNEW DELHI : With an aim to bring transparency to the emerging cryptocurrency market, index provider S&P Dow Jones Indices LLC on Monday went live with three cryptocurrency indices that have been designed to measure the performance of a selection of crypto assets listed on recognized and open exchanges.
The S&P’s indices will compete with Bloomberg’s crypto indices that measure performance of the largest digital assets traded in the US dollar.
S&P’s move is a step further in wider acceptance of cryptocurrencies by major global corporations after companies such as Tesla, MasterCard, PayPal, MicroStrategy and Apple earlier this year adopted bitcoin into their ecosystem.
“S&P has been known to track traditional finance markets. The indices will give traditional investors huge exposure to crypto and its potential, thereby further driving up the institutional participation in the crypto assets," said Nischal Shetty, chief executive officer (CEO), WazirX.
The index provider had last year announced that it would launch cryptocurrency indices in 2021 with the coverage of up to 550 digital assets.
While S&P Bitcoin (SPBTC) and S&P Ethereum (SPETH) indices will track the performance of the world’s biggest and the second-biggest digital assets, respectively, S&P Cryptocurrency MegaCap (SPCMC), will track both the digital currencies weighted by market capitalization.
The values of the S&P Bitcoin, S&P Ethereum and S&P Cryptocurrency MegaCap indices stood at 7,678.36, 29,405.14 and 5,895.79, respectively, as of 3 May 2021.
“This is expected to boost the credibility and veracity of the emerging cryptocurrency market. Coming at a time when there is an explosion in these assets, we can see that it would add spring to their values and volumes in the coming days and years," said Sumit Gupta, co-founder and CEO, CoinDCX.
According to the announcement, S&P crypto pricing and reference data is provided by a US blockchain data provider Lukka, which is backed by the parent company of S&P Dow Jones—S&P Global.
S&P Dow Jones' indices uses Lukka Prime Fair Market Value end-of-day price taken at 4 pm EST for cryptocurrency index calculation. Lukka’s methodology determines the fair value pricing of liquid cryptocurrency assets. “The LukkaPrime Fair Market Value Pricing uses a proprietary methodology to determine the primary exchange of each digital asset at any given time, which in turn determines that asset’s fair market value," S&P said in the FAQs of the indices.
The S&P Dow Jones’s announcement has come amid stellar run witnessed in the cryptocurrencies. While bitcoin has jumped over 100% in the four months of the year, ethereum has spiked four times during this period. On Tuesday, the second-largest cryptocurrency was trading at its fresh lifetime high of $3,447.
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