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In today’s Crypto for Advisors newsletter, Patrick Murphy from Eightcap provides insights on the maturation of crypto as an asset and compares the evolution of Indices to the S&P’s early days.
Then, Leo Mindyuk from ML Tech answers questions about indices in Ask an Expert.
What the S&P 500 Did for Equities, Indices Will Do for Crypto
Much like crypto today, equities in the early 20th century were an emerging and largely unregulated market, characterized by significant fragmentation and a lack of widespread public understanding. In 1957, when the S&P 500 was introduced, it revolutionized the financial landscape by providing a benchmark for investors. Not only did this legitimize equities as an asset class, but it also paved the way for mainstream adoption. Are we at similar crossroads with cryptocurrency? With indices poised to play a transformative role in its maturation, it appears to be so.
Cryptocurrency’s maturation and the evolving role of indices are making indices catalysts for wider crypto adoption. For example, the CoinDesk 20 Index (CD20) serves as a benchmark for the broader crypto market, helps provide market insights and acts as a building block for products to expand investor opportunities.
A fragmented and volatile market? The crypto market is a fragmented landscape, a paradox of innovation and instability. While over 23,000 cryptocurrencies exist, the majority suffer from low trading volume and limited liquidity. The crypto market is showing signs of maturation.
Key milestones include:
- ETF approvals on Bitcoin and Ethereum.
- MiCA regulation in the EU, which represents the first comprehensive crypto licensing.
- The Stablecoin Genius Act in the U.S. aims to foster innovation while protecting consumers.
Growing stablecoin adoption reflects a broader trend where stablecoins processed an estimated $27.6 trillion in 2024, surpassing Visa and Mastercard combined transaction volume.
The current crypto market parallels the equities market before the S&P 500, marking a significant step forward.
Happy reading!
Ask an Expert
Q: Why are crypto indices the logical next step for institutional adoption, similar to what the S&P 500 did for equities?
A: The S&P 500 simplified complexity, bringing structure, benchmarking, and ease of access.
Crypto today remains fragmented, noisy, and challenging to benchmark. It needs a similar evolution.
