Cryptocurrency index with ‘rules-based methodology’ for BTC, Ripple, Litecoin, ETH and more by Bloomberg

Bloomberg announced yesterday that they would be partnering with digital asset management firm Galaxy Digital Capital Management LP. The partnership in question would be creating an index designed to ‘track the performance of the largest, most liquid portion of the cryptocurrency market’.

The index is designated as Bloomberg Galaxy Crypto Index or BCGI. It is weighted by market cap and measures the performance of ten USD-traded cryptocurrencies. As such, the index is measured using the USD currency. The index is reconstituted and rebalanced monthly. It is administered according to “four guiding principles”, which are:

  1. Data Integrity, where cryptocurrencies must maintain minimum thresholds for daily traded USD value
  2. Diversified, where constituents of the index cannot exceed 30% or contribute below 1% of the index’s market cap
  3. Representative, which is its aim to provide ‘a proxy for the broader cryptocurrency market’
  4. Continuity, where the index is intended to be responsive to the changing nature of the market in a manner that it does not completely change it from year to year

As per Bloomberg’s press release, it says:

“…the BGCI offers the first institutional grade benchmark for the cryptocurrency market.”

The currencies in question are Bitcoin [BTC], Ethereum [ETH], Ripple [XRP], Bitcoin Cash [BCH], EOS [EOS], Litecoin [LTC], Dash [DASH]. Monero [XMR], Ethereum Classic [ETC] and Zcash [ZEC]. The currencies in the index are calculated using the eligibility criteria mentioned in the Bloomberg Galaxy Crypto Index fact sheet:

  1. The cryptocurrency must trade in USD
  2. Minimum of two sources that meet Bloomberg’s due-diligence criteria, which are that they have documented compliance programs that include but are not limited to Anti-Money Laundering and Know Your Customer policies, and have provided Bloomberg with organizational or ownership chart
  3. A minimum 30-day median daily value traded of $2 million across a minimum of two eligible pricing sources
  4. The cryptocurrency must be free-floating, that is, its price is not pegged to the value of any assets, including digital ones
  5. The above criteria must be met for 3 months
  6. Maximum number of constituents in the index is limited to the top 12 coins ranked by market cap
  7. Hard forks are also considered using the same criteria

The current standings of the currencies are as below

Index Constituent Weights

Index Constituent Weights

Alan Campbell, Global Product Manager for Bloomberg Indices said:

“Today’s launch of the Bloomberg Galaxy Crypto Index reflects our clients’ growing interest in cryptocurrencies. The index brings our rigorous approach to index construction to cryptos and will provide investors with a transparent benchmark to gauge the performance of the broader market.”

Steve Kurz, the Head of Asset Management at Galax Digital Capital Management said:

“We are thrilled to partner with Bloomberg on the BGCI.  The index’s independent, rules-based methodology provides a strong foundation on which the cryptocurrency ecosystem will continue to grow and mature.”

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