Cryptocurrencies allow individuals to place their investments in different kind of coins. There are more than 1,600 in the market, which is quite surprising. But it is sometimes difficult for investors to be managing their own portfolios at all times, selling and buying when they believe is the correct time.
This is one of the reasons why, cryptocurrency index funds are spreading all over the industry and the market. Some exchanges are already offering their own crypto index funds which manage several virtual currencies.
The funds are all based according to the overall performance of a group of assets, instead of being based on a unique virtual currency. Cryptocurrency funds allow users to spread the risk among different cryptocurrencies and reduces the time that investors need to manage their funds.
At the moment there are several cryptocurrency index funds. The Merkle was able to make a summary of the most interesting funds in the market:
Coinbase Index Fund LP (CBI):
Coinbase is one of the most important virtual currency platform in the world, and it is already offering an index fund. The Coinbase Index Fund includes assets that are now available on GDAX (Ethereum, Bitcoin, Litecoin and Bitcoin Cash). Currently only US accredited investors are able to place more than $250,000 dollars in the fund.
The index is run by Bitwise and has the top 10 cryptocurrencies weighted by 5-year diluted market capitalization, and assets are rebalanced on a monthly basis. Accredited US investors with at least $25,000 dollars are able to participate in this fund.
This is a tokenized index fund that tracks the top 20 cryptocurrency assets using smart contracts. The fund offers lower fees than others and there are no exit, broker or advice fees. Everyone but US citizens are able to participate.
The Cryptocurrencies INdex (CCi30):
This index tracks the 30 most important virtual currencies according to their market cap. It uses an exponentially weighted moving average of market cap and is available through the Cryptos Fund. It is available for worldwide investors and qualified US investors.
Other important funds are the Blockchain Index (BLC) and the Crush Crypto Core (CCC).
These funds are a great tool for investors that want to enter the market and invest in different virtual currencies. Cryptocurrency ETFs have struggled to get approval from the SEC.
Regulatory authorities follow the market very closely and are worried about market manipulation and scams. It is also important to mark that the total market capitalization of all virtual currencies is still less than the market cap of the S&P 500. That means that it is yet easy for large investors to manipulate price movements in smaller market cap currencies.
Additionally, cryptocurrency indexes tend to have 2-3% fees in contrast to traditional stock market fees that are usually under 1%. In the future, these funds will have to be more compliant with the SEC and the crypto market would have to be more mature for them to properly spread.