CoinDesk buys TradeBlock and joins Rush for Bitcoin Analytics

Terms of the deal were not disclosed. CoinDesk is owned by Digital Currency Group, or DCG, which was a minority investor in TradeBlock. DCG also owns Grayscale Investments, which sponsors the Bitcoin trust.

Benchmark rates are an important feature of traditional financial markets, used in areas such as exchange-traded funds and lending rates. They offer transparency and standardized pricing, which helps to improve liquidity and reduce costs for investors.

The TradeBlock deal illustrates how important data and indexes are to the industry. The price of bitcoin has almost quintupled since the start of 2020, setting a new high above $ 34,000 on Sunday, driven by a wave of investors looking to ride its momentum. The renewed interest has spurred demand for more sophisticated ways to track and trade cryptocurrencies.

CoinDesk, which has built its business around news, had yet to attempt to make a profit on its own data and price index products. This agreement, said managing director Kevin Worth, “is recognition that the market has changed.” CoinDesk operates a website that gets around five million views per month and hosts live conferences, including the annual consensus conference in New York City, the largest in the industry.

In another recent example of the rush to collect better data, S&P Dow Jones Indices, which manages the S&P 500 and Dow Jones Industrial Average, has announced 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 across the world. This results in a situation where no price is final.

Creating an industry-recognized standard, assuming the crypto market continues to grow, is a potentially lucrative opportunity.

CoinDesk, founded in 2013, began releasing a Bitcoin price index the same year, becoming one of the most recognizable benchmarks. But the CoinDesk index was built more as a narrative device – it’s a volume weighted average of prices across 10 indices – than as a product that could be licensed and used to build other financial products, he said. said Mr Worth.

TradeBlock, also founded in 2013, has built a business around its XBX index. He has raised $ 53 million in venture capital, with investors such as Andreessen Horowitz, Y Combinator and DCG.

Grayscale’s Bitcoin trust fund, which uses TradeBlock’s XBX as a benchmark rate, has seen a sharp increase in assets under management in recent quarters as more investors enter the industry. The assets of the trust, which are traded on the OTCQX over-the-counter exchange, jumped to $ 20.2 billion at the end of 2020, from $ 2.56 billion in June 2019.

According to details of a 2017 license agreement, Grayscale pays TradeBlock a fixed monthly fee and volume-based fee based on the value of the trust’s assets.

Write to Paul Vignes at [email protected]

Corrections and amplifications
CoinDesk’s Bitcoin Price Index is a volume weighted average of prices across 10 indices. An earlier version of this article incorrectly said that the index was a simple average of prices on three exchanges. (Corrected January 5)