Investors will soon been given a new way to invest in cryptocurrencies after Coinbase announced plans to release a weighted index fund for cryptocurrencies.
Asiff Hirji from Coinbase, the leading U.S. marketplace for buying and selling major digital currencies, announced the plan on CBNC overnight. Coinbase's president and chief operating officer explained that: "It's a very simple to use, easy way to get exposure to the crypto-assets that we offer on our exchange."
The Coinbase Index Fund will initially provide accredited U.S. investors exposure to all assets listed on the company's current exchange, GDAX. After which, there is speculation that it could open up more widely.
The aim of the Coinbase Index Fund will be to reflect major trends in the cryptocurrency market in the same way that the Dow Jones Industrial Average is a reflection on the state of the U.S. economy.
According to the company's release, the funds will be weighted heavily towards bitcoin (BTC). It will make up 62% of the funds, with ethereum (ETH) making up 27%, Bitcoin Cash (BCH) accounting for 7%, and Litecoin (LTC) making up the remaining 4%.
Although it is not expected to go live with investors for a couple of months, the Coinbase Index is already up and running for tracking purposes. As you can see below, it is at 4.981.31 points at present.
Foolish takeaway
Mr Hirji seems to think that this broader approach will be a winner for the company because "investors are not going to want to pick specific winners or losers."
I agree with him on this and think the launch is a good idea. However, it doesn't mean that using the index will make things any less risky.
So if the opportunity to use the index in the future does arise, I would suggest you only trade with what you can afford to lose.
