Digital Assets: “Thermodynamic energy, code and silicon suffice”

November 2021
By Joy Yang, Global Head of Index Product Management

Digital assets, and the technology and software underpinning the asset class, are disrupting traditional financial services, providing alternative channels for capital allocation, and creating new market opportunities and efficiencies. What is clear is that this is not just a technology disruption, but also a social shift driving the rise and acceptance of digital assets. This intergenerational wealth transfer is on the rise – the top digital assets have now surpassed the top US banks in size by market capitalization (refer to chart below). Matthew Sigel, Head of Digital Assets Research at Van Eck Associates, drives home an important point about this rising phenomenon:

“Perhaps, rapidly changing consumer preferences in the face of sticky government support for failing institutions might explain some of this phenomenon… Bitcoin + Ethereum market cap ($1.66T) vs. that of the top six U.S. banks ($1.41T) helps illustrate. The banks' $1.4T market value derives from the gap between their $12.4T in assets and $11.2T in liabilities, and the market's expectations of the return to be earned on that spread. Bitcoin's $1.2T market value, on the other hand, is derived from no such liability, and requires no such spread to sustain it. Thermodynamic energy, code and silicon suffice.”1

MVIS CryptoCompare Digital Assets 10 Index (ticker: MVDA10) is a modified market cap-weighted index which tracks the performance of the 10 largest and most liquid digital assets. BlueStar Top 10 US Banks Index (ticker: BUBNKNTR) tracks the performance of the 10 largest US exchange-listed companies in the banks industry. Investors can access both indices on the MV Index Solutions website.


Top 10 Digital Assets and UK Bank Market Capitalization ($mn) Growth

1 Source: Sigel, Matthew “Putting Bitcoin Futures in Perspective”, 22 October 2021. (www.vaneck.com/us/en/blogs/)


About the Author:

Joy Yang is Global Head of Index Product Management at MV Index Solutions (MVIS). She is responsible for managing MVIS products and services to accelerate innovation in financial index design and adoption. Joy brings more than 25 years of investment experience to MVIS, having led teams delivering index and quantitative-active investment solutions at Arabesque Asset Management, Dimensional Fund Advisors, Vanguard, Aberdeen Standard Investments, AXA Rosenberg and Blackrock. Joy has an MBA from the University of Chicago Booth School of Business, and a BS in Electrical Engineering from Cooper Union’s Albert Nerken School of Engineering.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.

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