The same Wall Street analyst who predicted bitcoin could quadruple in value in five years has created five indexes to track cryptocurrencies.
Last week, Fundstrat Global Advisors announced the launch of its FS Crypto FX indexes for institutional investors “to better understand the evolution and behavior of crypto-currencies.”
Earlier this year, Fundstrat’s Thomas Lee, a former chief equity strategist at JP Morgan Chase, predicted bitcoin could be worth $20,000 by 2022. He was the first major Wall Street strategist to formally make a prediction on bitcoin.
Fundstrat’s indexes won’t just track individual currencies or pairs: the indexes track a total of 630 digital currencies. These currencies are divided into five groups by market cap and trading volume. Proprietary algorithms calculate the weight of each currency in the index.
Investors can use these indexes to analyze the performance of digital currencies within the indexes. For example, you can see how your favorite mid-cap currency did in comparison to the general market at the time. A currency might be up 15% over the month, but if the market jumped 25% overall, then it puts that performance into perspective.
The indexes work in a similar way to how the advance-decline line of the number of S&P 500 stocks rising versus falling on a given day are used to indicate the general health of the market.
In the cryptocurrency industry, the advance-decline line peaked in June.
Five Cryptocurrency Indexes
The five Fundstrat indexes include each of the following:
- FS Crypto 10: Tracks the 10 largest and most liquid digital currencies, including bitcoin, Ethereum, Ripple, Litecoin, DASH, IOTA, and Monero.
- FS Crypto 40: Tracks the top 11 to 50 digital currencies by market value and liquidity, including NEM, BitConnect, and Lisk.
- FS Crypto 250: Tracks the top 51 to 300 cryptocurrencies by market value and liquidity, including notable names like Singular DTV, FirstCoin, and BitcoinDark.
- FS Crypto 300: Tracks the 300 largest digital currencies by market value and liquidity.
- FS Crypto Aggregate: This is the largest index offered by Fundstrat, and it tracks a total of 630 digital currencies.
Not all coins are treated equal in these indexes. Fundstrat uses a proprietary algorithm to determine the weighting of each coin. That weighting is re-calculated every quarter.
For now, the indexes are exclusively planned for research. Fundstrat is not currently using the indexes to support any investment products.
Obviously, this isn’t the first time we’ve seen a cryptocurrency index launched online. We’ve seen various efforts to create an index based on the top 10, 15, or 30 digital currencies. Multiple investment firms are seeking to create a unified standard for the health of cryptocurrency markets.
As part of the index release announcement, Fundstrat also issued some price predictions. Fundstrat technical strategist Rob Sluymer said that he doesn’t expect bitcoin’s price to break above $4,800 to $5,000 before the end of the year. Meanwhile, Ethereum seems to be facing pressure above $300, although Sluymer doesn’t expect it to fall below $195 or $206.
To learn more about Fundstrat’s new cryptocurrency indexes, visit online at Fundstrat.com.