The year 2020 will certainly be remembered for many things. The global COVID-19 pandemic is first among these things; the many negative issues that surround it will be vividly remembered as well.
As we get a bit of distance, though, surely some positives will come from this awful time. One of the bright spots we may look back on is that 2020 could be the year when cryptocurrency started going mainstream.
With many traditional fiat currency-based financial products providing less optimism than usual. Thanks to the global financial crisis, investors are looking for alternatives. Many have turned their eyes towards cryptocurrency. This is evidenced by Bitcoin’s record-breaking end of 2020/ beginning of 2021 where the coin sailed past the $30,000 mark.
Another indicator that crypto is moving from sparsely trafficked corners of the internet and into mainstream consciousness is that bigger financial players are beginning to get more involved in the markets. One of the biggest players in the investing world is S&P Dow Jones Indices. At the end of 2020, they announced that in 2021, they would be launching their own crypto indexes.
This is a big step for crypto as a whole. It draws more attention to space and validates digital currency as more legitimate trading and investing vehicle. The announcement is something we will likely look back on as a major step towards crypto becoming completely mainstream. Here are five points to know about the new Dow Jones crypto indexing service.
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1. What S&P Dow Jones Indices is
S&P Dow Jones Indices is a joint venture between CME Group, News Corp, and S&P Global that was launched in 2012. The company is best known for producing stock market indices. These indices are groups of financial products in which investors can invest through index funds. S&P Dow Jones Indices produces and maintains the two most well-known stock market indices in the world. The Dow Jones Industrial Average and the S&P 500.
Simply put, S&P Dow Jones Indices is one of the most important companies in the financial field. Any trader or investor involved in the stock market is not only well-aware of this company but also are likely to use their products on a daily basis. This is one of the most mainstream of mainstream companies in the investment world.
2. Why S&P Dow Jones Indices is getting involved now
Bitcoin was launched in 2009 and the crypto market has been growing, both in value and number of coins, ever since. At any point, big companies like S&P Dow Jones Indices could have gotten involved. Why have they chosen 2021 as the right time?
Like most things that are happening as the calendar rolls over from 2020 to 2021, much of it has to do with the pandemic. The global financial crisis that has resulted from COVID-19 has shaken investor confidence in fiat currency and central banks. Professional investors have started to look at digital currency as an alternative. Increased unemployment and work from home orders have turned more average people into professional investors. Young investors, especially, have flocked to crypto during this time.
These trends have led many traditional financial institutions to take notice and to start providing more crypto services. S&P Dow Jones Indices has specifically noted that they “feel [cryptocurrency’s] at a point of institutional interest in maturity” and that the boom in trading and investing illustrated the need for more reliable data around pricing.
3. Who is S&P Dow Jones Indices’ Partner Lukka?
To provide traders and investors with this reliable price information, S&P Dow Jones Indices will partner with Lukka, a leading cryptocurrency data firm. Lukka was founded under the name Libra in 2014 as a company that provided the first cryptocurrency tax calculator.
In 2017, the company pivoted and began to provide mainstream companies with data and software solutions to help them deal with the complexities of crypto. The partnership came about through Lukka’s existing relationship with a research firm that S&P Dow Jones Indices recently purchased, IHS Markit.
4. The S&P Dow Jones Crypto Index will be a powerful tool
In addition to the fact that this move will help validate the crypto market in general, it will also undoubtedly provide a powerful tool crypto investors can use to help them succeed in the market. The index will provide transparent and reliable pricing information for the top 500-plus coins on the market.
This information will be incredibly helpful to investors in this market who currently rely on a mix of tools to stay informed about all the developments in crypto. It should quickly become the leading pricing information tool used by investors. This Cove Market Overview details what tools you can use to stay on top of new crypto developments.
5. What this means for Crypto
This news means that crypto has arrived. The market has grown to a point where cryptocurrency can no longer be ignored by the financial products industry. While this doesn’t yet put crypto on par with decades-old investment vehicles such as stocks, bonds, and mutual funds, it does create a path for crypto to get to that level someday in the future.
In the short term, the announcement gives crypto greater institutional awareness. In addition to S&P Dow Jones Indices, worldwide financial leaders such as JP Morgan Chase, Goldman Sachs, HSBC, and Deutsche Bank are all looking at different ways to get in on the action as well. This sends a powerful message to rank and file investors about the future of crypto. This message should ultimately lead to much more engagement in the market.
When the investment powerhouse S&P Dow Jones Indices announced that they were partnering with crypto data specialists at Lukka to create indices in 2021, the financial world was put on notice.
This partnership will create powerful crypto investing tool and should lead to even loftier heights for the market. In the end, it may also mark the year that crypto took its biggest step towards going mainstream.