CoinMarketCap is getting into the investment space — and has launched a token that offers exposure to the world’s biggest cryptocurrencies.
As the name suggests, the CMC20 token keeps track of the top 20 digital assets by market capitalization. Stablecoins and wrapped tokens are excluded from this rundown, as well as privacy coins like Monero that have been banned in some jurisdictions.
It’s part of a collaboration with Reserve Protocol, which has billed this new index as a modern-day alternative to the S&P 500 in the U.S.
The timing of the CMC20 token launch was unfortunate to say the least. It came on a day Bitcoin slid below $90,000 for the first time in almost seven months, with Ether back under $3,000 as the crypto markets contract.
In fact, those who had snapped up CMC20 tokens would actually have lost 4.73% in 24 hours — considerably more than the 4.18% drop seen across the market capitalization of the entire sector.
As you might expect, this index is heavily weighted in favor of the four biggest cryptocurrencies: BTC, ETH, XRP, and BNB.
It’s rebalanced at the start of every month, and here’s how the current composition looks.
The index was initially given a base of $100 back on January 1, 2024 and was trading at $192.93 at the time of writing — in other words, rising by close to 93% so far. Bitcoin has surged by about 107% over the same period, with Ether jumping by a less impressive 29%.
Amid fears that another crypto winter is upon us, the CMC20 token is basically flat compared with 12 months ago — and has plunged by 29.5% from its yearly high of $275.48 on October 6, which coincided with a new record price for Bitcoin.
When the index itself was first unveiled back in September, pre-empting the token, CoinMarketCap’s CEO Rush Luton had said:
“The CMC20 index is a powerful addition to our existing suite of benchmarks, designed to give users a more practical and investable view of the top crypto assets, and a simple way to gain exposure to the broader market.”
One of the biggest limitations of the top indices on Wall Street — and the exchange-traded funds that track them — lies in how they only trade during business hours. By contrast, CMC20’s value is updated every five seconds, and tokens can be bought and sold 24/7.
The crypto industry specifically has also faced challenges, especially surrounding fragmentation. A meme coin boom means tens of thousands of tokens are now created on a daily basis — with millions of digital assets in existence. Executives behind CMC20 say: