On Thursday, S&P Dow Jones Indices, a subsidiary of financial data company S&P Global Inc, said it would introduce cryptocurrency indices in 2021, rendering it the newest big financial firm to join the evolving asset class.
Cryptocurrencies have been available for more than a decade, but in recent years, they have begun to draw more attention from major financial firms.
Institutions are Coming
Large companies, including Fidelity Portfolios and Nomura Holdings Inc of Japan, have begun adding bitcoin and other cryptocurrencies to their portfolios, while large exchanges have begun selling bitcoin derivatives.
With hedge fund managers such as Paul Tudor Jones and Stanley Druckenmiller stating they incorporate bitcoin in their large investing plans, the advent of more conventional financial technology has rendered the asset class more available to retail investors.
Customers of S&P would be able to access the index provider to build personalized indexes and other cryptocurrency benchmarking resources, S&P and Lukka said in a joint release.
S&P and Lukka hope that more accurate price data would make entry to the emerging asset class simpler for investors and reduce some of the uncertainties of the very competitive and speculative sector, they said.
“With digital assets such as cryptocurrencies becoming a rapidly emerging asset class, the time is right for independent, reliable and user-friendly benchmarks,” said Peter Roffman, S&P Dow Jones Indices’ global head of innovation and strategy.
It comes as bitcoin continues to grow, fuelled by increased demand from investors who claim the virtual currency is a shield against inflation and a safe-haven asset, to record peaks against the dollar.
Bitcoin has had a fantastic year by all reports, despite a fall at the start of the coronavirus pandemic that saw it lose 25% in March. Since December, it’s more than doubled and many fans are once again targeting the $20,000 mark as the next break barrier.
In recent months, innovations have helped drive this year’s rally. A Bitcoin fund was launched by Fidelity Investments, bringing its star strength and heritage to the Bitcoin space. Many famous names from Wall Street have bought in. Square Inc. and MicroStrategy Inc., public corporations, also recently invested in the coin.
And the October announcement of PayPal to enable consumers to tap cryptocurrency was one of the most prominent events for fans.
The S&P Stock Index
The S&P Stock Index is a capital market index that calculates the stock price of 30 major corporations listed on stock exchanges in the United States is the Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow.
While it is one of the most widely tracked share indexes, relative to wider sector indices such as the S&P 500 Index or Russell 3000, many consider the Dow to be an incomplete reflection of the entire U.S. stock market since it contains only 30 big cap stocks, is not weighted by market capitalization, and does not use a weighted arithmetical mean.
The value of the index is the amount of the stock prices of the firms listed in the series, separated by a factor which is approximately 0.152 at present (as of September 2020). Whenever a component business undergoes a stock split, the element is adjusted such that the performance of the index is unaffected by the stock split.