The famous cryptocurrency exchange Coinbase has just launched COIN50, an index that replicates the performance of the top 50 digital assets by market capitalization.
The instrument, tradable on Coinbase International Exchange and Coinbase Advanced, offers the possibility to easily invest in the crypto sector in a diversified way.
The choice of the platform to introduce COIN50 reflects the ever-increasing interest of investors towards Bitcoin and the major tokens.
Let’s see all the details below.
Coinbase introduces the benchmark index COIN50
With an unexpected move, the well-known US exchange Coinbase has launched a new global crypto benchmark called COIN50.
This is an index that represents the top 50 digital assets listed on Coinbase (excluding stablecoin) that meet certain specific admission requirements.
Coinbase Asset Management and Market Vector Indexes lead the oversight of this instrument, which appears to comply with international regulations (non US)
Investors can rely on this cryptographic tool for transparent and reliable exposure to the bull and bear cryptocurrency market.
Approximately from January 1, 2021, to September 30, 2024, the top 50 tokens in the market have outperformed Bitcoin in terms of economic return.
The individual assets contained within it are weighted based on their market capitalization, with Bitcoin which is obviously the primary currency.
In more detail, the orange coin makes up 50.3% of the new Coinbase index, while Ethereum represents 27.5%.
Following Solana with 6.4%, Ripple with 3.1%, Dogecoin with 1.5% and the rest of the top 45 crypto with 11.2%.
This breakdown highlights how the performance of COIN50 depends on almost 90% from the first 5 coins just listed.
Diversification and reference categories
In a manner similar to other indices in the crypto world, the new Coinbase index opens the doors to diversified investments in the crypto world.
Drawing inspiration from the benchmark of the S&P500, COIN50 aims to become a global point of reference, aiming to replicate its successes.
Since 1957, the U.S. investment instrument created by Standard & Poor has indeed been the most traded of all time, still today a leader among stock indices.
Regarding the reference categories of COIN50 di Coinbase, we notice how the dominant group is that of “Smart Contract Platforms”.
A substantial portion of the pie is also covered by the “DeFi” tokens, “infrastructure application & DePin” and “Media & Entertainment”.
There is a significant portion also for the crypto linked to the “Payments” and “memecoin” worlds, with the latter emerging as the true protagonists of the latest bull market.
Finally, the “Store of Value” coins close, like the king Bitcoin.
Futures trading and quarterly rebalancing: the characteristics of the new Coinbase index
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The new Coinbase index is tradable on Coinbase International Exchange for retail users, and on Coinbase Advanced for institutional investors.
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COIN50 offers the possibility to leverage up to 20X through a perpetual futures contract that follows the logic of crypto derivatives.
However, the tool is available solely and exclusively for users residing outside the United States, the United Kingdom, and Canada.
Verification is obviously required KYC, as it is a regulated benchmark in Europe and underlying the rules introduced with MiCA.
We also remind you that each COIN50 coin follows a rigorous verification process that evaluates the activities against legal, compliance, and technical security standards.
Regarding the rebalancing of the internal resources within the index, the practice occurs periodically based on the changes in market capitalization.
Every 3 months Coinbase will update the top 50 crypto (that meet the index criteria) based on their market performance. Additionally, the exchange buys and sells small amounts of each asset to rebalance the weighting of the instrument.
Here too, the S&P500 will serve as a model, with the stock index adding and removing an average of 30 titles per year.
The objective of Coinbase is to represent at least 80% of the total crypto market capitalization through its diversified basket.
The growing interest of institutional and retail investors in the crypto world
The introduction of COIN50 by Coinbase highlights the growing global interest of investors in opportunities inherent within the cryptocurrency market.
The crypto economy is rapidly expanding, with a vibrant ecosystem of tokens driving innovation and improving access within our financial system.
In the world of traditional finance, the presence of indices and derivative instruments has allowed in the past to expand the entry of capital into the stock market.
Now Coinbase is ready to take the same step in the crypto asset sector.
With Bitcoin having recently marked new all-time highs, there is no better cryptographic tool that simultaneously offers flexibility, diversification, and compliance
The launch of COIN50 comes at a crucial moment in the maturation of the markets, offering simplified access to digital speculations.
Investors do not have to deal with private keys and complex management of the investment. They also do not have to juggle multiple investments and different assets on their own, but can simply follow the benchmark.
Traders can also use the Coinbase index to track the performance of the broader crypto market and evaluate their returns.
COIN50 lays the foundations for future innovation in the way crypto assets are monitored, traded, and incorporated into investment portfolios.
Looking ahead, Coinbase aims to launch a significantly broader index, in line with the growing size and diversity of the market.
Source: https://en.cryptonomist.ch/2024/11/12/coinbase-launches-coin50-an-index-to-invest-in-the-top-50-crypto-of-the-market/