In what is being described as a shift to mainstream financial services, Reuters, Bloomberg, and TradingView have each enlisted CryptoIndex to provide information on the 100 best-performing digital tokens and cryptocurrencies. Over half a million traders will now gain access to the crypto focused index, or CIX100, which joins well-known indices such as the Dow and S&P 500 on trading terminals everywhere.
The CIX100 index seeks to improve access to information and transparency available to investors. The traditional financial services sector is accustomed to greater disclosure and regulation for traditional financial products. The Cryptoindex strives to offer a methodology suited to the needs and requirements of heavily regulated asset managers, institutional and professional investors.
CryptoIndex explains that their index uses the proprietary algorithm “Zorax” to analyze tens of millions of trades and news announcements from the nine largest cryptocurrency exchanges.
Cryptoindex is comprised only of coins that have consistently occupied a position in the top 200 for over three consecutive months and are almost always traded on multiple exchanges. The selected coins also have “a significant social media following,” adding an interesting modern twist to the index.
The Cryptoindex analyses over 1,800 coins. The index also incorporates over 33 Terabytes of data to extract over 200 factors that create a refined ranking in the index. The process of re-evaluation happens on a monthly basis and can see the index change on average by 12%, explains the company.
Rebalancing occurs on a monthly basis and is said to be designed to mitigate coins that have had their “value artificially inflated.”
Expect the new index to be utilized as the basis for multiple derivative offerings for the crypto sector in the future.
VJ Angelo, CEO of Cryptoindex, said the index is the culmination of three decades of experience.
“I have witnessed first hand the growing demand for high-quality insight into the traditionally opaque and misunderstood area of cryptocurrency, which led me to create Cryptoindex,” said Angelo. “Our index takes into account collective sentiments expressed on social media, in addition to complex data analysis of volume trades and predictive analytics.”
Angelo is the co-founder of London Derivates Exchange (LDX) and has spent the last 30+ years developing indices, financial products, and market infrastructure, notably in currency and fixed income markets.
Stan Bokov, CSO at TradingView, said by integrating the Cryptoindex they are demonstrating their commitment to “moving Fintech forward.”
Crowdfund Insider reached out to Angelo and asked when he expects to see the launch of exchange-traded derivatives for crypto.
Angelo explained that there are currently several exchange-traded derivatives for crypto on CME and CBOE, referencing the Bitcoin futures contracts. However, these are built on the template of traditional financial futures and are not necessarily suitable for the way the crypto markets operate.
“They are also subject to existing regulations and as such are proving very expensive on margining due to the high volatility of the market,” said Angelo. “There are also a number of crypto exchanges offering crypto derivatives, however, these aren’t always regulated. As a result, there is an opening for a properly designed and executed set of crypto derivatives in the market to meet institutional requirements. Cryptoindex will look to meet this need in the not too distant future though the precise timing isn’t yet agreed internally.”
Asked what type of institutional demand he is seeing in the marketplace for digital assets and Angelo said there is a strong interest for properly regulated and designed Crypto assets.
“While a number of exchanges are developing solutions none are yet fully formed or ready for a fully-fledged offering to institutional clients,” stated Angelo.
Regulation is key for any financial service industry to thrive. CI asked Angelo for his thoughts on the current regulatory approach to digital assets.
Angelo said there is a wide range of approaches to regulation across the globe. To date, the FCA approach has proven eminently sensible, in his opinion.
“They are taking the approach that current regulation covers a great deal of the market, and the use of Blockchain Smart Contracts and Tokens constitute a technology solution,” Angelo said. “The FCA is technology agnostic and therefore expect current regulations to be applied as appropriate. Having said that the FCA will be coming out with firmer regulation and definitions later this year. In the meantime participants can rely on existing regulations.”