The S&P Dow Jones has announced this week the addition of five new crypto indices, including an index that tracks over 240 coins. The indices join legacy financial indicators that have been paramount in the traditional markets, such as the S&P 500 and the Dow Jones Industrial Average.
The focal point of the five new indices is the S&P Cryptocurrency Broad Market Digital Index (BDM). This index will seek to provide a broad snapshot of the crypto market, and is the index tracking a hefty 240 coins at launch. At present time, there are approximately 275 cryptocurrencies with a market cap great than $100MM. However, the S&P Dow Jones has not disclosed if market cap will dictate selection criteria, at least for the BDM index.
The S&P Dow Jones only first expressed their intent to track crypto prices as recently as December 2020, and debuted Bitcoin and Ethereum price tracking indices just a couple months ago.
The remaining four indices are BDM derivatives that include the following:
• Cryptocurrency LargeCap Index: A BDM subset that hones in on select coins with the largest market caps.
• Cryptocurrency BDM Ex-MegaCap Index: A BDM subset that excludes bitcoin and ethereum.
• Cryptocurrency BDM Ex-LargeCap Index: A BDM subset that excludes that aforementioned crypto LargeCap Index.
• Cryptocurrency BDM LargeCap Ex-MegaCap Index: A BDM subset that includes the aforementioned LargeCap Index, and excludes the already established MegaCap Index.
The indices join the ranks of early digital asset benchmarks already established by S&P Dow Jones, including the S&P Bitcoin Index, S&P Ethereum Index, and S&P Cryptocurrency MegaCap Index.
The What, How & Why
The indices will pull pricing data from their already-established cryptocurrency partner Lukka, an enterprise-grade crypto software and data provider. Increasing indices around crypto reflect a clear growth in consumer demand that the S&P Dow Jones is now looking to address.
“The market for cryptocurrency assets continues to grow and with that, transparent benchmarking and index-based solutions based on crypto and blockchain assets are more essential than ever,” according to the S&P Dow Jones press release.
Global Head of Innovation and Strategy at S&P Dow Jones Indices Peter Roffman stated in the release that “for more than a century, our indices have offered insight into how the markets are performing. Now… we’re providing that answer to cryptocurrency investors,” adding that the indices “gives one of the broadest snapshots yet of this rapidly growing asset class with the ability to slice and dice by market cap. We’re excited to bring this significant level of additional transparency to the cryptocurrency market.”