More than just Bitcoin: The well-known index provider Stoxx wants to be able to identify the ten best crypto projects. The new index is also available as a listed product.
Many investors are now familiar with Bitcoin and Ether. But in addition to the two large crypto projects, there is a bewildering variety of small and medium-sized coins in which you could invest. Of the more than 9,000 tokens available today, only a few dozen are likely to remain relevant in the long term.
Now the well-known index provider Stoxx, a subsidiary of Deutsche Börse, promises to shed a bit of light into this obscure world. In collaboration with the Zug-based pioneer Bitcoin Suisse and the asset manager Valour, which specializes in crypto investments, he is now offering a blue-chip index for crypto assets.
Investable index
As with the well-known stock indices SMI or DAX, in which only particularly established stocks are included, the new index aims to filter out the ten most important tokens from the unmanageable mass of blockchain projects. If you want to make things easy for yourself, you can now simply buy a listed investment vehicle.
The corresponding exchange-traded product is already trading on the Deutsche Börse, although it will not be officially launched until next Tuesday. It tracks the digital asset blue chip index one-to-one. The fees are 1.9 percent.
There are also other providers, namely Amina, Sygnum or 21Shares, which display self-created crypto indices with listed products. But the index provider Stoxx is likely to enjoy greater trust, especially among institutional investors such as insurance companies or pension funds.
“Strategically important step”
“Of course there are already indices for crypto assets, but their providers are largely unknown in the traditional financial world. That’s why it’s an important signal that three leading companies are now launching the digital asset blue chip index together and making it investable,” says Marco Infuso from Valor Europa.
Stoxx managing director Axel Lomholt describes his company’s expansion into the world of digital assets as a “strategically important step”. «Over the last decade, asset allocation strategies have changed significantly. Until recently, a typical portfolio was 60 percent invested in stocks and 40 percent in bonds.”
Today, many institutional investors invest 20 percent of their capital in alternative investments such as infrastructure and raw materials. “Digital assets also belong in this category,” says Lomholt.
Making a promise of quality in the still barely regulated crypto world is a risky undertaking. “The requirements for a blue chip index are very high,” says Luzius Meisser, President of Bitcoin Suisse.
The calculation is based on a rule-based, comprehensible method that leaves no room for arbitrary decisions. “Market capitalization is just one of many criteria that determine whether a company is included in the index. “The number of developers and the economic activity in the associated system are also important,” says Meissert.
Market capitalization offers little guidance
In other words: Key figures that show how effectively it is being used and how willing customers are to pay are particularly important when assessing a blockchain project.
Unlike in the world of stocks, the pure market capitalization of digital assets offers little guidance for investors. Bitcoin and Ethereum together have a weight of around 68 percent. And this cluster risk is even greater if you exclude stablecoins, which by definition offer no potential for appreciation because they simply represent a conventional currency such as the dollar or euro.
Investing in meme coins – projects that are aimed solely at the emotions of investors – also seems to make little sense. The largest representatives in this category, Dogecoin and Shiba Inu, are still numbers 9 and 11 in the crypto market. In addition, many tokens have a meteoric rise, but no longer play a role a short time later.
Projects that have proven themselves
“There are many fashionable topics in the crypto market that may disappear quickly,” says Andrej Majcen, CEO of Bitcoin Suisse. “In the last cycle it was the Metaverse, at the moment projects in the areas of AI or gaming are particularly popular.”
In contrast, the digital asset blue chip index is made up of projects that have proven themselves and will still be relevant in a few years. “He has outperformed both Bitcoin and Ether in the last two years,” says Majcen. The weight of these two large tokens is limited to 30 percent each.
On March 26th, the stock exchange bell for a crypto investment product will ring in Frankfurt for the first time, says Marco Infuso. “So it’s a first in many respects.”