Asian Aggregator Launches Global Crypto Index as Bakkt Starts User Testing
A Singapore-based crypto aggregator has partnered a US digital asset venture consulting firm to launch an index that will be available on Bloomberg, Nasdaq GIDS, and Thomson Reuters Eikon.
The Maha-CoinGecko Digital Asset Index (MAGIX) by CoinGecko and Maha Advisors is a crypto market index that serves as a benchmark for users to track cryptocurrency market performance based on CoinGecko’s more than five years of historically back-tested data.
As a market capitalization weighted Laspeyres index, its tracking the broader crypto market will represent more than 90% of the capitalization of the coins currently in circulation. It wants to create a single data set for the marketplace to track the crypto market in aggregate, especially as crypto evolves and digital asset diversification grows, Chris Flint, Managing Partner of Maha Advisors, says.
Propping the crypto market standard
The index will use current market cap to provide an unbiased view of the market as re-calculated every five minutes based on current market prices and changes in circulating supply. An asset has to reach a market cap equivalent to 0.1% of the total market cap to be included in the MAGIX index while all assets must first maintain its weighting for at least 12 weeks to adjust for sudden spikes and declines.
MAGIX comes as the much-awaited Bakkt platform started its user acceptance testing (not testing of Bitcoin futures) on Monday July 22. The Bakkt platform seeks to provide custody of digital assets for institutional clients by offering physically-settled futures through a trusted infrastructure for secure digital assets transactions.
Its entry is expected to impact on institutional interest in crypto by encouraging their participation without limitations. The start of the user testing did not bring an upward jolt in the price of Bitcoin as some had expected but rather dropped it by almost 5% leaving several theories floating within the crypto ecosystem.
Bakkt as growth driver
One supports the view that there was no price reaction because the start of the platform’s user testing – eight months after the platform was initially planned to be fully operational – has already been priced in.
There is also the debate surrounding whether Bakkt, whose platform is required to hold and settle all their futures contracts in Bitcoin, has bought needed Bitcoin via over the counter (OTC) markets. Bakkt as well as other institutions’ alleged buying has subsequently dried up the OTC market leaving big buyers to source for Bitcoin on exchanges. The exchange sourcing of Bitcoin, some argue, supposedly explains observed upswings like the recent price move from ~$4000 to ~$13000. It also projects that a fully operational Bakkt would prompt solid demand for Bitcoin with time.
The user testing may not be expected to last till the end of Q3 (Sept 30) or until they get regulatory clearance to proceed with the full launch of the Bakkt platform – cited as the main reason for its launch delays. Bakkt is not likely to have an immediate effect on the crypto market but it may be the growth driver Bitcoin needs.