Indexing Is Coming to Crypto Funds Via Decentralized Exchanges

Indexing Is Coming to Crypto Funds Via Decentralized Exchanges

Indexing Is Coming to Crypto Funds Via Decentralized Exchanges

Indexing Is Coming to Crypto Funds Via Decentralized Exchanges

It is common to see certain crypto  in an investment portfolio alongside gold and traditional assets, but is it the right way to invest?

Indexing Is Coming to Crypto Funds Via Decentralized Exchanges

The adoption of index funds is growing at a rapid pace in other asset classes, and now bitcoin and altcoins are getting in on the action. Proponents of bitcoin’s use in this setting believe that the market capitalization of digital assets can take off once it hits the top 20. Furthermore, digital assets could even be traded on the CBOE.


Bitcoin and Altcoins Could Be Traded On the CBOE


The CBOE has been busy for a while working towards making bitcoin ETFs a reality. At the moment, it seems like there are enough hurdles and problems surrounding such a platform, so it is unlikely to see a product launch any time soon. A recent statement from the exchange does mention that they may launch an index fund for bitcoin, which is something that a lot of people are looking forward to.


“CBOE is considering listing an index fund for bitcoin. However, it’s a couple of years before we can go ahead with that. We have a trading platform on our C2CX exchange, and people are buying and selling bitcoins through our platform already,” CBOE explains.


Not everyone is a fan of bitcoin index funds. Several die-hard bitcoin investors state that it is far too risky to store your entire portfolio in an asset that is unregistered. Investing in an asset that is not cleared and compliant is not a good idea, even if it has been proven that it is more stable than fiat currencies. However, in a world that is now full of dark pools and high-frequency trading, asset managers need to take note and understand the needs of their clients.


Bitcoin Could Be a Big Player in the Index Market


Right now, bitcoin’s biggest use case is in the ethereum market. At the moment, the price of ether is so high that investors are paying people to get them into the market. The cost of ethereum has dropped significantly over the past two weeks, and it is now trading at about US$33.50 per token. Even if bitcoin prices were to remain flat for an extended period of time, this would be a huge market cap for the cryptocurrency. In comparison, ethereum’s market cap is about US$16.2 bln.


Other digital assets have risen in price to over US$1 bln in the past two weeks, but that is a combination of several cryptocurrencies that are not necessarily safe haven assets like bitcoin. Of course, if bitcoin’s price increases, these other cryptocurrencies may take off as well. Some believe that as more fiat currencies are devalued, digital assets will start to become more valuable and they may be used as a safe haven for wealth.


The fact that bitcoin has no float and cannot be traded at anytime provides it with huge advantages, especially as an asset class for an investment portfolio. Obviously, there are many risks to owning bitcoin, but proponents of this asset class believe that it has so much upside potential that it could really take off.


Do you think the cryptocurrency market will expand enough to support other cryptocurrencies being listed on the CBOE?


Tell us what you think about this matter in the comments below.


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