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S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

reuters.com

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Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#61

Post by safog »

anthonyhodlbot wrote: post #35

I built a way to enable users to index the cryptocurrency market via exchange APIs and have been operating it for about 3 years now. We've done about 100M in transactions. Some of the indices we built were a top 20 by market cap (10% cap), top 30 by squared root market cap. If you guys want to check it out: https://www.hodlbot.io

Hey - this looks great. Couple of questions:

- Does re-balancing create a taxable event? If so, given a bunch of these cryptos trade in BTC pairs, do you generate all the documents necessary to file taxes?

- What do you feel about the top 10 currencies changing so rapidly over time? I think every month (or maybe two) the top 10 list significantly changes. Doesn't that accumulate a lot of trading activity and fees? Given the volatility, is there any point to holding the top 10 instead of just holding solid / consistent cryptos like BTC and ETH?

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#63

Post by bgitarts »

misnamed wrote: post #51
PretzelPirate wrote: post #38

Earlier quoted context omitted.

I think part of the confusion is the word “currency”, which implies it’s something like USD. Ethereum’s ETH token, for example, is an asset that will appreciate if demand of the Ethereum network increases for real-world business applications (not just financial payments). That makes it much more like investing in a limited resource (ex: oil) that will go up in value. It’s still speculating, but most stock investments…

Stocks are shares in profitable companies. They have risks, sure, but they also have expected returns based on sound fundamentals and a long history of generating income.

You could say the same about Ethereum's ETH. It's a capital asset that when staked to validate blocks generates an expected return. You can discount those expected returns to the present like you would with any business.

Investing in profitable companies by itself does not generate above average returns. Only 1 of the original companies of the Dow Jones is still in it today, G.E. and it's performance as investment has been below average the past 20 years.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#64

Post by safog »

anm89 wrote: post #21
wp381640 wrote: post #6

Earlier quoted context omitted.

Probably the best strategy tbh, you only have to go to a few spots down to find some bad coins and the edge of the top 10 to find some outright scams

Bitcoin cash comes in at #7 on coinmarket cap and while I wouldn't call it a scam, it's not a respectable project IMO. And it quickly gets worse from there over the next 10. Strongly agree that the best bucket is going to be composed of a vast majority of bitcoin and ethereum. I don't believe crypto is on the whole in a bubble right now but the fact that Bitcoin Cash has a market cap of >$5B is one of the biggest thi…

I think BCH is a reasonable idea, block size is a problem with BTC and increasing it is fine even if it makes it less likely that normal users will run full nodes.

The scumminess of it comes from people like Roger Ver who peddle it as the "true" BTC. e.g., bitcoin.com is owned by the BCH folks and they have several intentionally misleading things there that try to re-brand BCH as BTC and BTC as BTC legacy or whatever.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#65

Post by cortesoft »

vesinisa wrote: post #59
Infinitesimus wrote: post #53

Earlier quoted context omitted.

> There is no better indication of a bubble then people telling you that you're the crazy one for questioning it. I remember people telling me I was crazy for not buying a house in 2007, and crazy for not trading tech stocks in 1999. I'm not sure that's a good indicator with so many counter examples: the internet, large touch screen phones, Cloud in the earlier days, etc. We truly have no idea what the future if Cryp…

> We truly have no idea what the future of X is What an excellent reason not to invest in X!

That is what risk is.... not knowing. If you want high reward from an investment, you need to take high risks, which means you will invest without knowing something.

Now, some risks are smarter than others...

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#66

Post by safog »

ajay-d wrote: post #48
anm89 wrote: post #21

Earlier quoted context omitted.

Bitcoin cash comes in at #7 on coinmarket cap and while I wouldn't call it a scam, it's not a respectable project IMO. And it quickly gets worse from there over the next 10. Strongly agree that the best bucket is going to be composed of a vast majority of bitcoin and ethereum. I don't believe crypto is on the whole in a bubble right now but the fact that Bitcoin Cash has a market cap of >$5B is one of the biggest thi…

I was more shocked to hear there are at least 550 actively traded coins.

It's a good time to write a crypto whitepaper and put up a fancy website. It's not alt-season yet .. when it starts is when you see the real shitcoin proliferation. Wouldn't be surprised if the number is in the 1000s.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#67

Post by nostrademons »

iamspoilt wrote: post #30

Someone please explain this to me: How is any cryptocurrency even considered an investment vehicle? I would classify myself as Boglehead and I believe in the fundamentals of investing in stocks because in all it's technicality (and given the buy-and-hold strategy), you are investing in a business by owning a part of it which naturally means that you will and do get the returns on it, both in terms of profits (dividen…

It's analogous to investing money in USD or GBP before those countries were given a license to print as many USD and GBP as they wanted.

Before then (1931 for the pound and 1933 for the dollar, though they maintained de-facto parity with gold until 1971), dollars and pounds were considered good investments. That's why we had bank runs: people thought their money would be safer under their mattress, and preferred to own physical currency rather than numbers in a bank's ledger. The only reason holding USD is a bad investment is because inflation is basically guaranteed: you know that a dollar will be worth less tomorrow than it will be today, because the authorities that control the dollar say so. Not so with Bitcoin: the total supply is fixed at 21M, forever, and there's no central authority with the power to change that.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#68

Post by fractionalhare »

iamspoilt wrote: post #55
misnamed wrote: post #51

Earlier quoted context omitted.

Stocks are shares in profitable companies. They have risks, sure, but they also have expected returns based on sound fundamentals and a long history of generating income.

Exactly my point. They add certain value to the economy and have fundamentals. From my understanding, I don't even consider Gold (a limited resource) a long-term investment.

Gold is a good portfolio asset for reducing overall risk in a long term investment strategy. You can beat the market over time with less risk by holding the S&P 500 and gold and weighting each according to respective volatility. This also has a lower beta exposure than just holding stocks.

Gold (and commodities more generally) have fundamentals - just different ones from equities. You can't take advantage of the universe of sound investment opportunities if you restrict your attention to equities.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#69

Post by joncrane »

elevenoh wrote: post #12

No brainer considering to buy ETH on the stock market via grayscale you're paying a 104% premium. The demand (e.g. within registered & margin accounts) is there. https://ycharts.com/companies/ETHE/discount_or_premium_to_na... Aside: Seems covid is accelerating understanding & adoption of crypto. I remember when I couldn't perform a wire transfer for a full week back in March '20 - at one of the most reputable banks g…

> I couldn't perform a wire transfer for a full week back in March '20 - at one of the most reputable banks globally

Can you explain this in more detail?

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#70

Post by elevenoh »

iamspoilt wrote: post #30

Someone please explain this to me: How is any cryptocurrency even considered an investment vehicle? I would classify myself as Boglehead and I believe in the fundamentals of investing in stocks because in all it's technicality (and given the buy-and-hold strategy), you are investing in a business by owning a part of it which naturally means that you will and do get the returns on it, both in terms of profits (dividen…

ETH for instance is used for fees in the decentralized economy (e.g. p2p lending/borrowing/investing/marketplaces).

If demand for fees in the ethereum economy outpaces supply, the price is likely to rise.

https://cryptofees.info/

Aside: If I issue equity in my company, I'd do it directly on a decentralized network like Ethereum > IPO. I'd prefer to not have an underwriter like goldman sachs take 3%+ & manipulate retail investors.

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