Barclay Cryptocurrency Traders Index, dropped 29.2 per cent in March
Within days of the launch of Bitcoin futures, Bitcoin rose to its all-time high of just under USD20,000 on December 18 last year. Today’s prices are just over USD8,000. Folks have their opinions, but no one really knows if it’s a bubble or a correction,” says Sol Waksman (pictured), president and founder of BarclayHedge.
The Barclay Cryptocurrency Traders Index is an equal-weighted index of the monthly returns of a representative universe of 19 constituent funds that trade Bitcoin and other cryptocurrencies. BarclayHedge started the Index in 2018.
“Based on the knowledge gained from our 32 years of experience in collecting, compiling, analysing, and indexing performance data from alternative investment funds, we wanted to minimise statistical biases which can distort historical index returns,” Waksman says. “We chose a January 2018 start date to avoid survivorship bias, backdating and selection bias.”
Cryptocurrencies like Bitcoin and its competitors enable secure, verifiable transactions that are extremely difficult to copy or counterfeit. Investments in the cryptocurrency sector exploded in 2017, leading to the December launch of trading in Bitcoin futures by CME Group (CME) and Cboe Global Markets (Cboe).
“The ability to trade Bitcoin futures on exchanges such as CME and Cboe, which are respected worldwide, provides a much-needed level of transparency, investor safety, and credibility to the price–discovery process and creates a level of institutional legitimacy that is crucial for growth in this sector,” Waksman says.
The Cryptocurrency Traders Index is the latest in a long line of BarclayHedge indexes tracking multiple sectors in the hedge fund and alternative investment universe. In addition to its 25 proprietary indices, BarclayHedge maintains 148 additional hedge fund indices for financial institutions in North America and Europe in its role as an independent index calculation agent.
Cryptocurrencies have been impacted this year by fears of a crackdown from regulators and concerns that they have been in a speculative bubble that is now deflating.
“Folks have their opinions, but no one really knows if it’s a bubble or a correction,” said Sol Waksman, president and founder of BarclayHedge.
Data from financial technology data tracker Autonomous NEXT also confirm the bear trend.
“There has been a slow-down in ICO (initial coin offering) proceeds that we track ($1 million and over), with a dip in February and a slight pick-up in March in terms of fundraising,” Autonomous NEXT said in a report also published this week.
ICOs are a fund-raising mechanism in which start-ups create currencies or tokens and sell them to investors.
“There is also definitely a slow-down in terms of ICOs starting in March. So it seems that the public crowd-funding part of the equation is indeed getting slower, looking like the summer of last year, rather than the frenzy of the fall/winter,” London-based Autonomous NEXT said.
The number of new funds in the company’s crypto fund tracker has also grown modestly in 2018, it said.
Autonomous NEXT said it is tracking 251 crypto funds.
“The number is not growing as quickly as we’d expect – partly because it’s a more difficult environment to raise, and partly because folks are being less vocal about what they’re doing,” the company said.