FTSE Russell just announced a new partnership with SonarX to launch crypto indexes. This move shows that institutional investors are increasingly interested in on-chain data and cryptocurrency metrics.
According to their announcement on January 28, FTSE Russell, a part of the London Stock Exchange, is expanding its indexing capabilities to include digital assets. This change reflects a growing demand from institutional clients.
Kristen Mierzwa, the head of digital assets at FTSE Russell, explained that they plan to use on-chain metrics and market data from various cryptocurrencies. This data will help them create fundamentally weighted indexes. These indexes are based on essential factors and are designed to serve as benchmarks for investment funds.
A spokesperson from FTSE Russell noted that institutional investors are asking for more data and insights about cryptocurrencies than ever before. They want to understand the on-chain data that can help determine the intrinsic value of different protocols.
Traditional finance has been paying more attention to cryptocurrencies recently. For instance, Bloomberg Terminal added over 50 digital assets in 2022. In 2023, FTSE Russell teamed up with Grayscale to offer an index series covering cryptocurrencies and smart contract platforms.
FTSE Russell, backed by the London Stock Exchange Group, currently provides over 20 stock market indexes. The Russell Indexes allow investors to track various segments of the global stock market. The Russell 2000 index, which focuses on small-cap stocks in the U.S., is particularly well-known.
Looking at institutional adoption, 2024 has been a significant year for crypto. The launch of several U.S. spot Bitcoin (BTC) exchange-traded funds (ETFs) has attracted over $120 billion in assets under management, according to Dune analytics.
While the approval of spot Ether (ETH) ETFs was less prominent in 2024, analysts believe institutions will begin investing in Ethereum soon. Ether ETFs saw over $3 billion in cumulative inflows in the last two months of 2024. Galaxy Digital expects this trend to grow, forecasting nearly $5 billion in net inflows into ETH funds between January and May.
Grayscale executive Dave LaValle predicts that the success of crypto ETFs will lead to new product offerings. He anticipates more single asset products and a variety of index-based and diversified options in the near future.