Could a Digital Currency Index Be the Future?
Digital Currencies May Need An Index
As of June 2017, the collective market value of all digital currencies surpassed $100 billion for the first time. One major contributing factor, according to CoinMarketCap.com, is that there currently are well over 800 digital currencies. As these digital currencies gain popularity as a new asset class, investors have begun to wonder if there is a digital currency index in the cards for the future.
There currently is no digital currency index available to retail investors. But several companies have created their own private indexes to serve as a market indicator. A digital currency index would follow the price fluctuations of the 5 largest mined digital currencies — Bitcoin, Ethereum, Litecoin, DASH, and Monero.
Just like the stock market, it is difficult to pick digital currencies that are consistently gaining in price, so many traders rely on market diversification. Eventually, a digital currency index also would make it easier for traders and investors to diversify among digital currencies.
As the market grows and brokerages work to make different types of products available through digital currencies, a digital currency index seems inevitable.
Recently, the Bitcoin ETF was recently denied approval by the SEC, but that decision is under appeal. As there is increasing market demand, we are sure to see more regulations and products emerge in the realm of digital currencies. Next week we’ll continue to report on bitcoin and the rise of digital currencies in our bitcoin blog series.
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