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The cryptocurrency indices use Lukka, a crypto data provider, as the data source for digital asset pricing and reference data.
The S&P Dow Jones Indices have launched its first-ever crypto indexes featuring Bitcoin (BTC), and Ethereum (ETH). According to the published document detailing the methodology, the indexes include the S&P Bitcoin Index which measures the performance of Bitcoin, the S&P Ethereum Index, designed to measure the performance of Ether, and the S&P Crypto Mega Cap Index dedicated to measuring the performance of both digital currencies.
With a primary objective of tracking the performance of the top digital currencies listed on exchanges around the world, the move showcases how matured the digital currency ecosystem has come. As detailed by the S&P Dow Jones, the cryptocurrency indices use Lukka Inc., a crypto data provider, as the data source for digital asset pricing and reference data. These data were drawn from the Lukka Prime and Lukka reference data products respectively.
There were defined eligibility criteria attained by the two digital currencies indexed by the S&P Dow Jones. These include the listing and active trading on a major exchange, for at least 60 days prior to the index rebalancing date. The indices however do not directly measure the performance of the cryptocurrencies in dollars but in points. Per a Coindesk report, the methodology yielded the following point valuations as of Monday afternoon: 7,611 for BTC, 24,811 for ETH, and 5,617 for MegaCap.
Ray McConville, a Spokesman for the S&P confirmed that the three indices measure price appreciation, and not the prices of the assets in themselves.
“So comparing the two indices, we can see that Bitcoin YTD has grown 95.67% in value vs. ETH, which has grown 273.72% in value YTD,” he said via email. “The actual index value isn’t so much as important as the change in that index value over time.”
Bitcoin in the S&P, New Milestone in Journey to Mainstream Adoption
Going by the traditional market importance or the relevance of data provided by S&P Global, the move to launch indices for the two largest cryptocurrencies will contribute in a way to the push to get into the mainstream adoption cycle.
Bitcoin has grown remarkably in the past year, bolstered by the last halving event, and the massive inflow of funds from institutional investors. From MicroStrategy Incorporated (NASDAQ: MSTR) to Square Inc (NYSE: SQ), and electric automaker, Tesla Inc (NASDAQ: TSLA), major Wall Street firms are now pumping money into Bitcoin, and digital currencies as a whole.
Many companies are also lending a hand to build the ecosystem around BTC such as PayPal Holdings Inc (NASDAQ: PYPL) who now supports Bitcoin buying and selling. Social trading platform, eToro launched an index for related firms driving the mainstream adoption of the digital currency.
Undoubtedly, the traction the cryptocurrency ecosystem has garnered over the years is becoming recognized by the mainstream market. The three crypto indices from the S&P is just one more way to push the industry towards new horizons.