US Federal Reserve Economic Data (FRED) Opens Cryptocurrency Index
The US Federal Reserve Just Launched a Cryptocurrency Index
There was huge news in the cryptocurrency industry toady as the United States Federal Reserve launched a Cryptocurrency Index.
As spotted by Bitcoin.com, the Federal Reserve Bank of St. Louis added cryptocurrency to their Federal Reserve Economic Data (FRED) database. It’s a signal of the maturation of the cryptocurrency industry. It’s especially important given that the US Federal Reserve is one of the most important central banks in the world.
The price data posted in the FRED database dates back to 2014 and goes all the way to the present. The data is collected from Coinbase.
Is the FRED Cryptocurrency Index A Big Deal?
The Federal Reserve Bank of St. Louis is one of 12 regional banks within the US Federal Reserve. Together, the twelve regional banks make up the US Federal Reserve. The St. Louis Fed, as it’s known, is part of the 8th District along with other midwestern Federal Reserve banks. It’s also known as an economic research powerhouse, and the bank is largely responsible for maintaining the FRED database.
In order to maintain the FRED database, the Federal Reserve Bank of St. Louis uses more than half a million data points derived from 81 sources. Those data points include GDPs, exchange rates, interest rates, banking indexes, consumer index, producer price indexes, and more.
As Bitcoin.com explains, FRED isn’t some irrelevant database used by niche traders. Instead, it’s a highly-regarded source of authority for the financial industry:
“FRED-published statistics carry massive weight in the professional financial world.”
Other Federal Reserve Banks Aren’t as Crypto-Friendly
The Federal Reserve Bank of St. Louis has given the cryptocurrency industry more legitimacy by adding four crypto prices to its FRED database. However, other regional banks within the Federal Reserve system haven’t been as crypto-friendly.
Atlanta’s Federal Reserve bank, for example, recently warned younger investors to avoid buying cryptocurrencies. The Federal Reserve Bank of Minneapolis issued a similar warning, although they encouraged investors to research “blockchain technology” while avoiding cryptocurrencies.
The San Francisco Federal Reserve bank, meanwhile, pegged the price of bitcoin at a lower-than-market rate. That bank claimed the “real” price of bitcoin was related to the total cost of mining – or just under $2,000 per coin, according to the Federal Reserve Bank of San Francisco.
This isn’t the first time the Federal Reserve Bank of St. Louis has made headlines within the crypto industry. A few months ago, the bank published a meditation on bitcoin where they claim bitcoin can be considered alongside the US Dollar.
Nevertheless, it’s not all good news from the St. Louis Fed. The bank’s governor, James Bullard, issued a statement in May claiming cryptocurrencies may be pushing in the wrong direction:
“Cryptocurrencies may unwittingly be pushing in the wrong direction in trying to solve an important social problem, which is how best to facilitate market-based exchange.”
Ultimately, the addition of four cryptocurrencies to the FRED database is all good news for the crypto industry. It indicates that the US Federal Reserve – one of the most powerful central banking institutions in the world – is acknowledging the influence of cryptocurrencies. Since the database now contains data from Bitcoin Cash, Litecoin, and Ethereum, it also suggests that the bank may add more cryptocurrencies to the database in the future.