Investors Seriously Deficient in Good Quality Crypto Asset Benchmarks

Speaking about the cryptocurrency indices, we always imply finding that ideal benchmark, which can be applied to measure and compare various investment portfolios (single asset class or mixed) performances.

There are luckily many crypto indices created so far by classic investment information providers like Bloomberg and investment banks, as well as by numerous crypto industry portals. Among them are CMC Crypto 200 Index by Solactive (^CMC200), Crypto200 ex BTC Index by Solactive, where both belong to a family of CoinMarketCap Indices, as well as Nasdaq Crypto Index (NCI).

The CoinMarketCap Indices are a suite of benchmark indices designed to be the most comprehensive in the market, measuring the performance of the top 200 cryptocurrencies by market capitalization traded in USD. These indices are developed and owned by CoinMarketCap, the world’s crypto data authority, and calculated and administered by Solactive, an index engineering firm in Germany that is fully compliant with IOSCO Principles for Financial Benchmarks. CoinMarketCap calculates market capitalization for each cryptocurrency as “price multiplied by circulating supply.” The circulating supply metric used by CoinMarketCap accounts for locked, reserved or non-saleable coins or tokens that cannot affect the price of a cryptocurrency, and hence are not factored into a cryptocurrency’s market capitalization. Using circulating supply to determine market capitalization for cryptocurrencies is analogous to using public float to determine the market capitalization of publicly listed companies.

Nasdaq Crypto Index (NCI) tracks the performance of a diverse basket of USD-traded coins.

Nasdaq Index family applies stringent liquidity, exchange, and custody checks to assess asset eligibility. Assets must be traded on at least three vetted Core Exchanges and supported by at least two Core Custodians. They are rebalanced and reconstituted on a quarterly basis. The index is free-float market-cap weighted. The Index is designed to be dynamic in nature, broadly representative of the market, and readily trackable by investors.

Another prominent contributor to the crypto index family is certainly Bloomberg. The Bloomberg Galaxy Crypto Index (BGCI) is a capped market-cap-weighted index designed to measure the performance of the largest digital assets traded in USD. Index members are diversified across different categories, including values, mediums of exchange, smart contract protocols and privacy assets. The Bitcoin (BTC) and Ethereum (ETH) Indices are designed to measure the performance of a single digital assets traded in US dollars. The Bloomberg Galaxy Defi Index (DEFI) is another capped market-cap-weighted index targeting the wide variety of decentralized finance. It comprises digital assets where the underlying protocols include market-making, lending, borrowing, and liquidity and yield aggregation.

Finally, there is the German CRYPTO MKT 10 PR Index with little description in English, but a high rate of citation among various business media.