Dow Jones to offer cryptocurrency index in 2021
Dow Jones announced last Thursday (03) that it will launch a cryptocurrency price index in 2021.
Dow Jones initiative is another step in legitimizing the cryptocurrency market
In statement, Dow Jones said the reason for the decision was the maturity of the cryptocurrency market.
Therefore, there is a need for reliable price data for the main crypto products.
Therefore, this stance indicates that the cryptocurrency market is increasingly gaining its place in the face of the traditional market on Wall Street.
Pricing Methodology developed by startup Lukka
The data that will help compose the price of the index will be provided by startup Lukka.
The company has developed what it believes to be a pricing methodology focused on fair market value for cryptocurrencies.
The announcement says the index should make it easier for new investors to access this asset class.
Mitigating risks for new investors
There are no official price lists in the universe of cryptography due to the decentralized nature of this market.
The same asset can (and usually has) different prices on different platforms.
In fact, this phenomenon is what enables so-called “arbitrage”, where traders try to buy assets in places where the asset is cheaper and sell where it is more expensive.
At the same time, Lukka understands that the index is a way of mitigating “common risks associated with this traditionally speculative market”.
Thus, investors, especially novices, will have access to an index that proposes a “fair” price for crypto, helping them to avoid possible scams.
Dow Jones gradually surrenders to Bitcoin
Bitcoin has definitely conquered its space in the global economic universe.
The fact that S&P Dow Jones offers a crypto index is another step in legitimizing this market.
However, the new index is not the only one.
Recently, Nasdaq, the global stock exchange operator, launched the Nasdaq Crypto Index, with the Brazilian manager Hashdex, to act as the basis of a publicly traded fund (ETF) on the Bermuda Stock Exchange (BSX).
Still in 2018, the giant financial data company Bloomberg LP launched the Galaxy Bloomberg CryptoIndex, a benchmark for the largest cryptocurrencies.
Therefore, the announcement reinforces the trend already seen in the cryptocurrency market that the high of 2020 has been driven by institutional investors from the United States.
The index operated by S&P Dow Jones can provide diversified exposure supported by Lukka data.
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