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The challenges of crypto indices

The challenges of crypto indices

Research reports

Zurich, 7 June 2021 – The institutional adoption of digital assets has reached a crucial inflection point in 2020. Apart from payment and ecommerce providers accepting crypto currencies as means of payment, corporate treasuries using Bitcoin as a store of value for corporate liquidity and central banks experimenting with own stable coins, the rise of digital assets to a promising asset class has been significantly driven by renowned global asset managers starting to diversify into Bitcoin and other crypto currencies to access new sources of return and profit from unique diversification benefits.

Now that digital assets are starting to be embraced as an institutional asset class, the question arises: how to access digital assets and what specifically to invest in. Digital assets are very diverse in terms of the use cases and ecosystems building around them, technological differences that set them apart, or their token supply models. Because of this diversity, and because there are no widely agreed fundamental valuation models nor widely accepted benchmarks, many investors struggle both with token selection and portfolio construction.

As a read across from the equity markets, most investors use market capitalisation as a strong indicator of a blockchain project’s success. This report aims to demonstrate that this is not without challenges in the digital asset space. Our hope is that by the end of this report, you will have gained new insights, helping you in selecting your digital asset investments.

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Disclaimer: This document was prepared by Sygnum Bank AG. This document may contain forward looking statements and may be subject to change. The opinions expressed herein are those of Sygnum Bank AG, its affiliates, and partners at the time of writing. The document is for informational purposes only and contains general material. It is for use by the recipient only. It does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum Bank AG to purchase or sell assets or securities. It is not intended to be used as a general guide to investing and should be used for informational purposes only. When making an investment decision, you should either conduct your own research and analysis or seek advice from an expert to make a calculated decision. The information and analyses contained in this document have been compiled from sources believed to be reliable. However, Sygnum Bank AG makes no representation as to its reliability or completeness and disclaims all liability for losses arising from the use of this information.

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