The Impact Of The Nasdaq’s Crypto Indices For Bitcoin And Ethereum Investments Could Be Huge
Nasdaq, the world’s second-largest stock exchange, launched indices for Bitcoin and Ethereum prices on February 11th.
Crypto Investment Products Precursor
Cryptocurrency analyst Alex Ziupsnys sees the move as Nasdaq indicating they see cryptocurrency as a serious investment vehicle long-term, saying:
“NASDAQ to add a bitcoin index on its platform. They are reading the writing on the wall and don’t want to get left behind. There is no stopping this. Adoption happens gradually right in front of you until you finally pause, look around, and bitcoin is the dominant asset.
This is big news. The launch of Nasdaq crypto indices could lead to regulatory approval for crypto-based derivatives in the market. And as a direct initial effect could mean more interest from institutional traders. The feeds are going live Feb 25th.”
Breaking: What Crypto Winter? Nasdaq to Launch Bitcoin Futures Market https://t.co/EHeog8TPJ3
— CCN Markets (@CCNMarkets) November 27, 2018
July 2018 saw the Securities and Exchange Commission (SEC) reject a proposal for Bitcoin’s exchange-traded fund (ETF) from Tyler and Cameron Winklevoss. The main concern for the SEC was the pricing of Bitcoin, claiming there is a risk of price manipulation throughout crypto exchanges. This means an ETF will struggle to operate based on price.
Their official released document went on to say that small trades affect the pricing of Bitcoin in exchanges. Plus the presence of overseas markets makes it too difficult to audit.
“This commenter expresses concerns regarding the Gemini Exchange Spot Price, noting that the nominal price of the Shares under the proposal is supposed to be tied to the market price of bitcoins at the Gemini Exchange, which is closely tied to the ETP proponents.”
SEC Chairman Jay Clayton drove this point home during an interview with CNBC in November of last year, reiterating the need for cryptocurrencies to be free from market manipulations in order for their ETF to be approved.
The Chicago Board Options Exchange (CBOE) options and firms like VanEck are currently working with the SEC to release the first ETF in the market.
Fortunately, Nasdaq’s indices could not have come at a better time. The Bitcoin Liquid Index (BLX) and Ethereum Liquid Index (ELX) provide real-time referencing to the price of both BTC and ETH in USD using the liquid parts of global markets to find a reliable spot price.
While Nasdaq appears to be committing to cryptocurrency as a legitimate point of investment by releasing BLX and ELX, they could, in turn, be providing a base price by which Bitcoin and Ethereum could have regulated investment vehicles long-term and be a reference point for approval from the SEC.
According to former Citi and Allianz executive Hwang Hyeon-cheol, cryptocurrency lacks a stable level of liquidity and market for retail and institutional investors. Most pending investment vehicles in the U.S. target retail investments and required reliable pricing.
Nasdaq’s indices could serve as that reliability for the years to come and open a lot of doors very quickly for crypto, at least according to analysts.