CoinDesk Inc., a bitcoin-focused media company, has leveraged analytics company TradeBlock Inc. to capitalize on the demand for data-driven products in the bitcoining cryptocurrency industry. Is acquired.
TradeBlock is a data and trading firm that publishes both free and subscription data. Its most notable product is a bitcoin price index called XBX that is used as the reference rate, or benchmark value, for investment funds such as the grayscale bitcoin trust..
Terms of the deal were not disclosed. CoinDesk is owned by Digital Currency Group or DCG, who were minority investors in TradeBlock. DCG also owns Grayscale Investments, which sponsors the Bitcoin Trust.
Reference rates are an important feature of traditional capital markets, which are used in areas such as exchange-traded funds and lending rates. They offer transparency and standardized pricing, which helps investors improve liquidity and lower costs.
The TradeBlock deal shows how important data and indices are becoming for the industry. The price of bitcoin has almost quintupled since early 2020, setting a new high above $ 34,000 on Sunday, driven by a wave of investors. The renewed interest has led to calls for more sophisticated ways to track and trade cryptocurrency.
CoinDesk, which built its business around the news, had not previously tried to profit from its own data products and price indices. The deal, said chief executive Kevin Worth, “is a recognition that the market has shifted.” CoinDesk operates a website that gets about five million views a month and hosts live conferences, including an annual consent conference in New York that is the industry’s largest.
In a more recent example of a rush to collect better data, the S&P Dow Jones Indics, which manages the S&P 500 and the Dow Jones Industrial Average Index, unveiled plans to launch a bitcoin index in 2021.
Unlike the stock market, where all data comes from centralized exchanges, bitcoin and its crypto competitors trade on hundreds of large and small digital exchanges around the world. This results in a situation where no price is fixed.
Creating an industry-recognized standard, which the crypto market believes continues to grow, is a potentially attractive opportunity.
CoinDesk, established in 2013, began publishing a bitcoin price index in the same year, becoming one of the more recognizable reference rates. But CoinDesk’s index was designed more as a neoretic device – it is an average-weighted average of prices on 10 indexes – than a product that could be licensed and manufactured other financial products. Is, Mr. Worth said.
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TradeBlock, which was also founded in 2013, has built a business around its XBX index. It has raised $ 53 million in venture funds, with investors including Andreessen Horowitz, Y Combinator and DCG.
Grayscale’s Bitcoin Trust Fund, which uses TradeBlock’s XBX as its reference rate, has recorded a sharp rise in assets under management over the past few quarters as more investors enter the sector. Assets in the trust, which trade on the over-the-counter exchange OTCQX, increased from $ 2.56 billion in June 2019 to $ 20.2 billion in late 2020.
According to the 2017 license agreement details, Grayscale pays TradeBlock a set monthly fee and a volume-based fee based on the value of the trust’s assets.
Write Paul Vigna at [email protected]
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CoinDesk’s Bitcoin Price Index is the average weighted average of prices on the 10 indexes. An earlier version of this article incorrectly stated that the index was a simple average of prices on three exchanges. (Corrected on 5 January)
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