Mainstreaming Cryptocurrencies

June 29, 2018 01:00 PM
Trade Wars & Markets

A Win-Win 

Hehmeyer has a two-pronged approach. As the sector becomes more heavily invested, it will need an index to serve as a benchmark for investors to measure their performance against. There will also be a desire by investors to gain exposure to the sector as an investment. Investors will be able to gain that access through the commodity pool or through other products based on the index. 

 “We have talked to two exchanges — one of them is very interested in listing it as a tradeable product,” Hehmeyer says. 

The growth of the cryptocurrency space, both in numbers and values, has created the need for an index (or indexes) to measure the sector. Hehmeyer is banking that this index can serve that purpose. 

The index was priced at $1 when they began their calculation of it based on the index methodology in May of 2013. It went up to a high of $220 in December 2017, then down to $60 and now sits around $86 (see “Crypto sector,” below). “It has been a very good indicator of what the cryptocurrency market, in general, is doing,” Hehmeyer says. “It also would make for a very good — though volatile — derivative product, particularly in terms of options. We think it is a very good product.”   


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About the Author

Editor-in-Chief of Modern Trader, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange.