May 11, 2018
Comparing Crypto Indices: Understanding the Bloomberg Galaxy Crypto Index and the Rad 30 Crypto Composite
On Monday, we launched the Rad 30 Crypto Composite that tracks 30 crypto assets not named Bitcoin or Ethereum. Later in the week, on Wednesday, Bloomberg (in partnership with Galaxy Digital Capital Management) launched the Bloomberg Galaxy Crypto Index (BGCI) that tracks 10 of the largest crypto assets by market cap.
There are some key differences between the two approaches:
1. The BGCI tracks 10 of the largest crypto assets. The RAD 30 tracks 30 varied crypto assets.
The top crypto assets by market cap present a very specific view of decentralization. The BGCI effectively tracks two sectors:
- Cryptocurrencies and Store-of-Value Coins (Non-private: Bitcoin, Bitcoin Cash, Litecoin, Ripple; Private: Dash, Monero, Zcash)
- dApp Ecosystems and Smart Contract Platforms (Ethereum, Ethereum Classic, EOS)
These crypto assets are undoubtedly important. They do not, however, offer an understanding of how crypto is impacting the diverse set of industries in which it is being deployed and explored. The RAD 30 excludes BTC and ETH. The RAD 30 tracks assets drawn from 10 (decentralized) sectors:
- Advertising
- Crowd Capital Allocation
- Distributed Cloud Computing
- Ecommerce
- Energy
- File Storage and Sharing
- Financial Services
- Healthcare
- Insurance
- Social and Digital Media Networks
We believe both approaches are important and valuable. One offers concentration; the other offers variety and perspective.
2. The BGCI, at least currently, is heavily weighted toward BTC and ETH and is very correlated to both assets.
So far this year, both the RAD 30 (-37.5%) and the BGCI (-19.4%) have traded down. As have BTC (-34.6%) and ETH (-0.38%).
The BGCI typically moves with BTC and ETH. Since the beginning of 2018, the BGCI diverged from (read: moved in the opposite direction of) BTC on 13.4% of days (17 total) and diverged from ETH on 7.9% of days (10 total).
The RAD 30 diverged from BTC on 44 days (34.7% of total) and from ETH on 45 days (35.4% of total). RAD 30 moves on its own ~2–3x more often than BGCI. This becomes more evident when examining correlation data and charting how assets change over time.
The below charts compare the BGCI’s and the RAD 30’s deltas (daily change) to ETH’s and BTC’s deltas.
We view Bloomberg’s creation of a crypto index as another positive for the decentralized economy. Indices are valuable tools for markets and market participants.
About the Rad 30 Crypto Composite
The Rad 30 Crypto Composite (RAD 30) tracks thirty crypto assets across 10 sectors, similar to how the S&P 500 and the NASDAQ Composite track stocks. The RAD 30 presents a diverse view of decentralization — the RAD 30 strays away from Bitcoin, Ethereum, and other large crypto assets (in terms of market cap).
The sectors included in the RAD 30 are the sectors that are the most prone to decentralization and have the largest market opportunities. The crypto assets included in the RAD 30 are the best positioned crypto assets in each sector.
Each sector is weighted evenly (10%). Each constituent crypto asset in each sector is weighted proportionally according to its market capitalization.
About Radicle and Rad.Crypto
Radicle is a category-defining research and information company built on understanding startups and new technologies. Rad.Crypto is Radicle’s crypto research arm.
Disclaimer: Radicle is not an investment advisor, and Radicle makes no representation regarding the advisability of investing in any security, asset, token, fund or other investment vehicle. Radicle is not a tax advisor. Inclusion of a security, asset or token within a Radicle composite or any Radicle analysis is not a recommendation by Radicle to buy, sell, or hold such security, nor is it considered to be investment advice. Past performance of a composite is not an indication or guarantee of future results. All Radicle materials have been prepared solely for informational purposes based upon information generally available to the public and from sources believed to be reliable. The composite data and analysis shown do not represent the results of actual trading of investable assets/securities. Radicle maintains the composite(s) and calculates the composite levels and performance shown or discussed, but does not manage actual assets.
