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Friday, September 24, 2021

S&P Launches First-Ever Crypto Indices for Bitcoin and Ethereum: Why It Matters

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S&P Dow Jones Indices, one of the world’s largest index providers, launched a new series of digital asset benchmarks.

Dubbed the S&P Digital Market Indices, the series includes the S&P Bitcoin Index, Ethereum Index, and Cryptocurrency MegaCap Index. Each of these indices will track the performance of Bitcoin and Ethereum, with the latter tracking a combination of both. The pricing data is sourced from crypto data provider Lukka.

Despite choosing to only include the two largest cryptocurrencies by market capitalization, S&P stated that it will include other cryptocurrencies through large-cap and broad market indices. According to CoinMarketCap, Bitcoin and Ethereum lead the space with market cap of $1.04 billion and $395 million, respectively. Binance Coin (BNB) is a distant third at $95 million. 

Bitcoin (BTC/USD) and Ethereum (ETH/USD) Market Capitalization on Tradingview.com

As the market for cryptocurrencies continues and institutional demand continues to rapidly grow, benchmarking crypto and the blockchain space is more essential than ever before. “Traditional financial markets and digital assets are no longer mutually exclusive markets,” said Peter Roffman, Global Head of Innovation and Strategy at S&P Dow Jones Indices. 

“As cryptocurrency becomes more mainstream, investors now have access to reliable and transparent benchmarks backed by institutional quality pricing data. We look forward to further expanding our new family of Digital Market indices and bringing much needed transparency to this exciting market.” 

Why S&P’s Digital Market Indices May Be Integral 

Indices play an integral role in the public market structure, providing insight and more importantly, powering tradable products. With the introduction of S&P’s latest indices, institutions could build their own derivatives without directly owning the underlying crypto assets. 

Will S&P’s Digital Market Indices become a staple in the traditional financial world? That remains to be seen. But with the SEC delaying its review of potential crypto ETFs and current alternatives like the Grayscale Bitcoin Trust continuing to lose its luster, S&P’s latest offerings will likely be the catalyst for further institutional adoption. 

Featured image from UnSplash 

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