Billionaire Mike Novogratz Launches Crypto Index For Institutional Investors

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Billionaire Mike Novogratz Launches Crypto Index For Institutional Investors

Billionaire Michael Novogratz, who has invested a third of his money in cryptocurrencies, developed a cryptocurrency index in collaboration with Bloomberg on May 9, 2018 to monitor the “biggest, most liquid section of the cryptocurrency market.” Bloomberg Galaxy Crypto Index (BGCI) measures the top ten cryptocurrencies and is weighted by market capitalization. It will be rebalanced on a monthly basis.

The composition of the index reflects the lopsided nature of cryptocurrency markets: the top five coins account for more than 90% of the index’s total weight. The two most valuable cryptocurrencies, Bitcoin and Ethereum, each account for 30% of the index, with Ripple, Bitcoin Cash, and EOS rounding out the top five. (See also: Who Are Bitcoin’s Top 5 Millionaires?)

“The index applies our rigorous methodology to index development to cryptos and will give investors with a clear benchmark to assess market performance,” said Alan Campbell, global product manager for Bloomberg Indices.

First institutional-grade benchmark for crypto market

While there are other indexes claiming to monitor cryptocurrencies, BGCI promises to provide the “first institutional grade benchmark for the cryptocurrency sector.” “You’re seeing more institutional engagement, and what they’re looking for is this architecture,” Novogratz told Business Insider. “Here’s an index that will feel like the S&P 500 in a few months and against which individuals may compare themselves.” (Also see: Crypto Index Fund Delivered 45% Returns In First Two Months.)

The comment from Novogratz comes against a background of more good news from the bitcoin ecosystem for institutional investors. Goldman Sachs Group Inc. (GS) officially revealed intentions to start trading bitcoin in the coming weeks. The parent company of the NYSE, the Intercontinental Exchange, is also apparently planning to create a crypto trading platform. Cryptocurrency exchanges, for their part, have started to clean up their act and may be open to regulation. This is a significant shift from last year, when institutional investors avoided an increasingly hacked and scandal-plagued bitcoin sector. (Also see: How Goldman’s Bitcoin Bid Could Change The Industry.)

  10 Important Cryptocurrencies Other Than Bitcoin

However, there are still issues to address. Investors, for example, are still battling to establish a position for bitcoin in their portfolio due to its unique character and potentially shaky link with other assets.

Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the writer to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author owns 0.01 bitcoin as of the day this post was published.

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