Full Details of What Bloomberg Calls ’First Institutional Grade Benchmark for the Cryptocurrency Market'

  • Bloomberg has launched a new index called Bloomberg Galaxy Crypto Index (BGCI) that is designed to track the performance of the largest, most liquid portion of the cryptocurrency market.
  • At inception date (3 May 2018), the index had ten cryptocurrencies, and the base value of the index was 1000.
  • It is believed that this index will make it easier for institutional investors to put money into the crypto market.

Bloomberg, in partnership with Galaxy Digital Capital Management, has launched the Bloomberg Galaxy Crypto Index (BGCI), what it calls in its press release the "first institutional grade benchmark for the cryptocurrency market."

Galaxy Digital Capital Management, nicknamed "Goldman of Crypto", is a New York based merchant bank founded earlier this year by billionaire Mike Novogtaz, a former Goldman Sachs partner and macro hedge fund manager at Fortress Investment Group. The aim of the bank is to "trade crypto as well as make principal investments, manage assets for other clients and provide advice on blockchain-related ventures."

BGCI is a benchmark designed to track the performance of the largest, most liquid portion of the cryptocurrency market. It is market capitalization-weighted, and measure the performance of ten USD-traded cryptocurrencies. The index's constituents are diversified across different categories of crypto assets, including stores of value, mediums of exchange, smart contract protocols, and privacy assets. Although BGCI co-branded with Galaxy Digital Capital Management LP, it is owned and owned by Bloomberg Index Services Limited. The index can be accessed on the Bloomberg Terminal via ticker "BGCI Index."

According to the BGCI Fact Sheet, these are some of its key features:

  • The pricing sources are assessed for risk and suitability.
  • It is calculated using Bloomberg Crypto Price Fixings (CFIX).
  • It is rebalanced and reconstituted every month.
  • It uses a rules-based index methodology.
  • It uses the strength of Bloomberg's index capabilities (data, pricing, analytics, distribution, and research).

Bloomberg uses the following guiding principles to administer the index:

  • Data Integrity -- pricing sources are chosen on the basis of liquidity and reliability; cryptocurrencies must meet minimum thresholds for daily traded USD value.
  • Diversification -- no single constituent can exceed 30% or contribute less than 1% of the market cap of the index.
  • Representation -- the index tries to serve as a proxy for the broader cryptocurrency market.
  • Continuity -- although the index needs to be responsive to changes in the market, it must adapt to these changes such that the character of the index is not completely reshaped from year to year.

Here are the main selection criteria for the index constituents:

  • Trades in USD.
  • At least two eligible pricing sources that meet Bloomberg's "due diligence" criteria.
  • Minimum 30-day median daily value traded of $2 million (across at least two eligible pricing sources).
  • Free-floating pricing.
  • The cryptocurrency must meet the above requirements for three consecutive monthly rebalances.

At inception (3 May 2018), the index constituents and their weights are as follows:

  1. Bitcoin ​​30.00%
  2. Ethereum​​​ 30.00%
  3. Ripple 14.14%
  4. Bitcoin Cash 10.65%
  5. EOS 6.11%
  6. Litecoin 3.77%
  7. Dash 1.67%
  8. Monero 1.66%
  9. Ethereum Classic 1.00%
  10. Zcash 1.00%

Further information about BGCI's index methodology can be obtained at the Bloomberg Indices website .

This is what Mike Novogratz had to say about the new index in an interview with CNN Money:

We are hoping that this index will become the bellwether and benchmark for the whole crypto space... that hedge funds are compared to it and that it is seen as this kind of watershed moment where crypto starts to become an investible asset class from an institutional perspective.

Mike Novogratz, Founder & CEO of Galaxy Digital Capital Management

 

 

Feature Image Credit: "Wall Street" by "Glen Scarborough" via Flickr; licensed under "CC BY 2.0"

Bitcoin Mining Pool Tries to Help Tone Vays Win $10K Bet Against Roger Ver

Cryptocurrency mining pool SlushPool has recently manually added a BTC transaction into a block to help Tone Vays, a derivatives trader and analyst, win a wager mage against BCH proponent Roger Ver.

The wager was made at the 2019 Malta AI & Blockchain Summit, during a debate between bitcoin (BTC) proponent Tone Vays and Bitcoin.com CEO and BCH advocate Roger Ver. In it, Ver argued BTC transactions are too expensive for business use due to the cryptocurrency’s small block size.

Vays, on the other hand, argued segregated witness (SegWit) and second-layer scaling solutions like the Lightning Network allow users to make small transactions without paying high fees, and that he has been using BTC on-chain without paying too much for transactions.

The debate ended up seeing Vays send Roger Ver $5 worth of BTC with a one satoshi per byte transactions fee – equal to the fees paid on the Bitcoin Cash chain – to see if it would confirm the same day. If it did, the CEO of Bitcoin.com claimed he would donate $10,000 to a charity of Vays’ choice.

During the debate, both parties noted the transaction was “priority 23,836 out of 24,355 transactions,” meaning that most transactions on the Bitcoin blockchain had to clear before miners picked that one up, at least according to fees paid for transactions.

As Vays soon noted on social media the transaction cleared after 10 hours. Some, however, found it strange. Cobra Bitcoin, the pseudonymous co-owner of Bitcoin.org and Bitcointalk, pointed out on social media that SlushPool – the mining pool that found the block the transaction was included in – manually added it to help Vays win the bet.

Cobra Bitcoin figured it wasn’t mined “naturally” as it was the second transaction included in the block – right after the coinbase transaction – despite the fee being less than 1% of that of all other transactions included in the block.

On Reddit, users pointed this out and accused SlushPool of manually adding the transaction. The mining pool, according to some users, is known for supporting BTC and being against Bitcoin Cash.

Should Roger Ver Pay?

The wager quickly became a controversial topic that seems to bring back memories of the scaling debate that was going on before Bitcoin Cash forked off of the Bitcoin network back in August of 2017.

Some argue that Roger Ver’s point stands as the transaction wasn’t “naturally” confirmed, but manually included in a block. Moreover the CEO of Bitcoin.com claimed he’d donate the money if it confirmed that day, and when the transaction did confirm it was past midnight in Malta.

On the other hand, some claim the transaction did go through anyway, and as such Roger Ver should donate the funds to a charity of Tone Vays’ choice. Moreover, Vays himself argued BCH supporters could have spammed the BTC mempool with two satoshis per byte transactions to stop his from clearing on time.

On Twitter, Vays created a poll that was retweeted by SlushPool and admitted the mining pool did prioritize the transaction. It currently shows most users believe Roger Ver should donate the funds. As one commenter pointed out, however, the results may change if Ver and other BCH supporters retweet the poll.