The MVIS CrytpoCompare Digital Assets 10 Index (DA 10) pictured below is up more than 4,000% over the past year, versus around 1,600% for Bitcoin.
The index is part of a full suite of indices launched earlier this month by VanEck subsidiary MV Index Solutions. The DA 10 tracks the performance of the 10 largest and most liquid digital assets, including Bitcoin, Ethereum, Bitcoin Cash, Ripple, Litecoin and more using pricing data from a global list of over 50 exchanges to ensure fair price discovery and global representation.
“The index’s demanding size and liquidity screenings, combined with the exposure it provides to the biggest names in digital assets, makes this akin to a Dow Jones Industrial Average for the crypto space,” according to MVIS.
The index may be seen as a way for a broader group of investors to monitor the cryptocurrency markets. Unlike traditional indices, the digital assets trade twenty-four hours a day, seven days a week on a various exchanges, so it is more challenging to find the fair value price of the assets.
Looking ahead, the indices may pave the way for future ETFs, and more investors may be able to access this nascent asset class.
Gabor Gurbacs, Director of Digital Asset Strategy with VanEck, argued that there may be plenty of growth potential ahead. While Gurbacs likened crytpocurrency to digital gold, he said bitcoin still has a lot of room to run. To put the market in perspective, gold has a market capitalization of $8 trillion, whereas bitcoin or BTC has a market-cap of about $200 billion.
“There is a 40x growth potential if bitcoin is the new digital gold,” Gurbacs told ETF Trends.
If investors look at bitcoin as a form of currency, bitcoin would currently represent the 25th largest country as based of M1 money supply, or comparable to Ireland, Poland and Russia.
Gurbacs sees bitcoin and other cryptocurrencies as a potential alternative to safe-haven assets like gold.
“Bitcoin is more like digital gold than currencies and a store of value,” Gurbacs added.
Nevertheless, Gurbacs warned that the newly developing asset category is still in the early stages with no wide specific use yet, so there is still considerable risk with the assets.
For more information on the cryptocurrency market, visit our Bitcoin category.