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An index is a method to track the price of an asset/basket of assets in a standardized way.
As we explained in a past article, an index is different from an index fund in the way that it is solely a tool that measures the performance of an asset or a group of assets, representing a benchmark, not an investment instrument on its own.
In this article we will lay down some of the most followed and popular indices in the crypto market.
The NYSE is the world’s largest and second oldest stock exchange, the market capitalization of its listed companies being US$30.1 trillion as of February 2018.
It is an icon of the modern economy, offering entrepreneurs the opportunity to raise capital and investors to profit from the world’s most successful companies.
NYSE developed The NYSE Bitcoin Index (NYXBT) as a way to allow traditional investors to gauge Bitcoin market dynamics.
It aims to represent the value of one bitcoin in U.S. Dollars (USD) as of 16:00 hours London time each weekday. The Index is calculated sourcing data from qualified exchanges, currently Coinbase Pro and itBit. Only bitcoin transactions conducted in USD are eligible to be input into the Index.
Calculation Frequency: Once-a-Day, calculated and published within 2 hours following 4 PM U.K. time each weekday.
Details and methodology:
https://www.nyse.com/quote/index/NYXBT
https://www.theice.com/publicdocs/data/NYSE_Bitcoin_Index_Methodology.pdf
S&P Dow Jones Indices LLC is a company that produces, maintains, licenses, and markets stock market indices as benchmarks, but also as the basis of investable products, such as exchange-traded funds (ETFs), mutual funds and other financial instruments.
Besides its renowned S&P 500 and the Dow Jones Industrial Average (DJIA), the company also manages the oldest index in use, the Dow Jones Transportation Index, created in 1882 by Charles Dow, the founder of The Wall Street Journal.
S&P developed a large variety of crypto indices as well, in order to track digital tokens and bring transparency to this ever-growing asset class.
The S&P Cryptocurrency Indices are designed to serve as benchmarks for the performance of a selection of cryptocurrencies that are listed on recognized, open exchanges while meeting liquidity and market capitalization criteria.
Among indices provided are the S&P Bitcoin Index, the S&P Cryptocurrency MegaCap Index (tracking both BTC and ETH, the S&P Cryptocurrency Broad Digital Market (BDM) Index (tracking the performance of digital assets listed on recognized open digital exchanges that meet minimum liquidity and market capitalization criteria) and the S&P Cryptocurrency Top 10 Equal Weight Index (an equally weighted index that seeks to track the performance of the top 10 cryptocurrencies by market capitalization from S&P’s BDM).
S&P also offers risk-hedged indices — the S&P Bitcoin Dynamic Rebalancing Risk Control 40% Index (CET Close) — and indices that track the crypto futures market — the S&P CME Bitcoin Futures Index.
Details and methodology:
https://www.spglobal.com/spdji/en/index-family/digital-assets/cryptocurrency/
https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-digital-market-indices.pdf
Nasdaq, Inc. is an American multinational financial services company that owns and operates three stock exchanges in the United States (the Nasdaq stock exchange, the Philadelphia Stock Exchange, and the Boston Stock Exchange), and seven European stock exchanges.
Its crypto indices have the goal to provide a benchmark for institutional investment in the cryptocurrency market.
Its Nasdaq Crypto Index (NCI) currently has eight cryptocurrencies as its constituents; as of June 1, 2021, Bitcoin and Ethereum (ETH) together add to around 94% weightage, while the remaining is spread across Litecoin (LTC), Chainlink (LINK), Bitcoin Cash (BCH), Uniswap (UNI), Stellar Lumens (XLM) and Filecoin (FIL). This index is rebalanced and reconstituted on a quarterly basis.
The Nasdaq Crypto Index Europe (NCIE) is designed to measure the performance of a significant portion of the overall digital asset market while remaining compliant with ETP listing standards at specified European exchanges.
The Nasdaq Bitcoin/Ethereum Index (NQBEI) is designed to measure the performance of the industry’s two most prominent digital assets, Bitcoin and Ethereum. The Index has been specifically designed to allow Institutional Investors to track the real-time value of a free float-weighted basket of Bitcoin and Ethereum by applying a rigorous methodology to order book data captured from cryptocurrency exchanges that meet eligibility criteria of the Nasdaq Crypto Index (NCI).
Lastly, the Nasdaq Bitcoin Reference Price Index (NQBTC) is meant to track BTC’s price movement.
Details and methodology:
https://indexes.nasdaq.com/Index/Directory
Popular crypto data provider that pioneered the market capitalization valuation model in the crypto asset space, CoinMarketCap developed an index in collaboration with Solactive, an index engineering firm in Germany.
Crypto200 Index by Solactive (CMC200) and Crypto200 ex BTC Index by Solactive (CMC200EX) are benchmark indices designed to be the most comprehensive in the market, measuring the performance of the top 200 cryptocurrencies (with or without Bitcoin) by market capitalization traded in USD.
These are rules-based indices calculated and administered to exacting standards with a start date of December 31, 2018 and a base value of 100.00.
They track constituents’ market capitalization using CoinMarketCap’s trusted dataset and are rebalanced and reconstituted quarterly and feature a robust index methodology administered by Solactive.
The indices are developed and owned by CoinMarketCap, and calculated and administered by Solactive, which is compliant with IOSCO Principles for Financial Benchmarks.
Details and methodology:
https://coinmarketcap.com/indices
CoinDesk, leading news site specializing in bitcoin and digital currencies, developed its own subsidiary dedicated to cryptocurrency indices.
CoinDesk Indices (CDI) is the leading provider of digital asset indices, supplying industry standard benchmarks, investable indices, reference price rates, and custom solutions.
In operation since 2014, the CoinDesk Bitcoin Price Index (XBX) has the longest history of any digital asset index in the market.
Beside XBX, CoinDesk has many other single asset indices that track the price of different altcoins (ETX for ETH, ADX for ADA, LNX for LINK etc).
It provides as well broad indices, addressing multiple crypto assets and containing protocols that are included in Digital Asset Classification Standard (DACS): Smart Contract Platform Index (SMT), DeFi Index (DCF), Culture & Entertainment Index (CNE), Computing Index (CPU) and Currency Index (CCY)
The CoinDesk Market Index (CMI) is also a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.
CoinDesk’s Select Indices include some of the largest and most liquid digital assets classified in Digital Asset Classification Standard (DACS) that meet certain trading and custody requirements (Large Cap Select Index, Metaverse Select Index, Industry Group Select Equal Weight Index).
Details and methodology:
https://www.coindesk.com/indices/
Compass is a Swiss-based company focused on the design, calculation and publication of market benchmarks, financial indices and tailor-made quantitative investment strategies.
With an experienced team, it is managing hundreds of financial indices with several billion USD of investment products linked to these indices, being one of the most innovative and reactive index service providers.
It offers the largest collection of single-asset indices (+60) among the providers reviewed, across various crypto industries.
The Compass Crypto Reference Indices that represent the value of the cryptocurrencies at 4pm London Time according to a specific methodology while the Compass Crypto Volatility Indices — 20% provide exposure to cryptos while controlling the volatility of the strategy. It also feature indices for USD Coin, Tether and Pax Gold, managing as well a few Euronext indices and CoinShare’s Bitcoin Hourly Reference Rate index.
Additionally, Compass provide broad indices like the Compas Crypto Basket Top 10 Index, Layer 1 Index, Smart Contract Platforms, Fundamental DeFi Index, and also CoinShares’ Equally Weighted Crypto Index, giving exposure to a multitude of top crypto projects at once.
Details and methodology:
https://www.compassft.com/indices/?asset=digital-assets
BITA is another index provider, claiming to be the world’s first provider of end-to-end infrastructure for indexation. It provides independent, innovative and methodologically-sound indices that are investable and replicable by its customers, covering a large variety of exposures and themes.
Its range of crypto indices is relatively small relative to the equity indices, including only basket indices, but it is nevertheless appealing. Indices provided include BITA Crypto 10, 20 and 30 Indices, Decentralized Finance Select Index, Metaverse and NFT Select Index, Crypto Next 20 Index (a basket composed of the bottom 20 cryptocurrencies from the BITA Crypto 30 Index) and even the Football Club Fan Token Index!
Details and methodology:
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