The Emergence of a New Asset Class
The cryptocurrency market slump witnessed during the first quarter this year has hardly served as a deterrent to new index and fund launches. According to cryptofundresearch data, 2017 alone witnessed 156 new crypto fund launches, with 2018 projected to record 165. Single-asset crypto funds have been in existence since 2013 (the Bitcoin Investment Trust, for example). However, since then we’ve seen 2 prominent trends: the emergence of new crypto assets and the need to diversify. This has led to the emergence and popularity of multi-asset crypto indices and funds. 2018 saw the Grayscale’s Digital Large Cap Fund launch in February, and the Coinbase Index Fund launch in May. Now, Blockforce Capital (formerly Reality Shares) is set to join in the fun, with its own offering. The newly transformed digital asset management company is launching its very own multi-asset crypto product, the REBEL Crypto Index.
The REBEL Crypto Index
The Reality Shares REBEL index tracks the performance of 6 of the top and most readily available cryptocurrencies, offering diversification across crypto assets. These are: Ripple, Ethereum, Bitcoin, Bitcoin Cash, EOS, and Litecoin. The cryptocurrencies chosen were based on several factors including liquidity, availability, volume, and market cap. The index is weighted based on floating market capitalization. Floating market capitalization is the preferred method as it account for the changing nature (especially, supply characteristics) of the asset class.
The chart above gives a snapshot of the current composition and financial metrics associated with the REBEL Index.
Blockforce Capital believes that its REBEL index will perform well for general market intelligence. They are also working on future product launches based on the REBEL index. We contacted Eric Ervin, President & CEO of Blockforce Capital for comments on any future products they have in pipeline. While Ervin was hesitant to reveal the company’s further plans for creating investment products on the index, however he did mention that, “…an ETF based on the six largest cryptocurrencies would be a logical next step. It would likely solve a few of the SEC’s recent criticism’s around cryptocurrency ETFs. However, we don’t want to stop there.”
TETFs – The Next Logical Evolution in the Crypto Investment Space
He went on to discuss his longer-term vision to create an entirely new type of investment class – Tokenized Exchange Traded Funds. “We also feel that tokenizing baskets of cryptocurrencies is the next logical evolution in the crypto investment space. He refers to these products as TETFs or Tokenized Exchange Traded Funds. We believe that exchanges such as Coinbase, Nasdaq, and even ICE are working through the regulations to list securitized tokens offerings. This will pave the way for modern investors to invest in a variety of asset classes whether they be cryptocurrencies, stocks, commodities, bonds, real estate and a multitude of other investments,” Ervin told Bitrazzi.
Over time, the ETF industry has grown to over $5 trillion USD, taking market share from the long established mutual fund industry. Ervin believes that “Tokenized ETFs have the potential to now disrupt the ETF industry.”
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