PYMNTS.com Launches the Bitcoin Price Index and the Bitcoin Volatility Index
Rising concerns over bitcoin trading prompt leading finance experts to develop indices that track movements in this most rapidly growing alternative currency
BOSTON, April 15, 2014 – PYMNTS.com today announced that it has launched a real-time “Bitcoin Price Index by PYMNTS” (BTC/PI) to track the trading price of bitcoins, the controversial but rapidly growing alternative currency. BTC/PI was designed by experts in financial benchmarks including indices for trading stocks and bonds. PYMNTS.com is the leading media property dedicated to innovation in the dynamic payments and commerce ecosystems.
According to Karen Webster, President of PYMNTS.com, “Alternative currencies are a fast growing part of the payments landscape. Unfortunately, when it comes to tracking the prices of these volatile currencies it has truly been amateur hour. So in order to provide the market with the most reliable and credible source on the real price and volatility of bitcoin, we reached out to leading experts on financial benchmarks at Global Economics Group so that they could build indices that provides the most accurate information on the price and volatility of bitcoins.”
According to the BTC/PI the price of bitcoins was $461.26 at 4:30pm EST on April 14, 2014 a drop of 25.4% percent from the price a month earlier on March 17, 2014 at the same time.
In addition to tracking the price of bitcoin, PYMNTS.com has also launched the “Bitcoin Volatility Index by PYMNTS” (BTC/VI), which tracks the volatility of bitcoin and other alt-currencies compared with traditional currencies monthly. The volatility index is based on the ratio of average standard deviation of the daily percent change in bitcoin versus the euro and average standard deviation of the daily percent change in the dollar versus the euro. The BTC/VI shows that bitcoins were 18.4 times more volatile than the euro during the first quarter of 2014.
Global Economics Group, PYMNTS.com’s partner in calculating the new indexes, developed the BC/PI following rigorous scientific methods for calculating financial indexes. According to Chad Coffman, President of Global Economics Group, “We calculated a volume-weighted price index using the real-time bid-ask spreads of all exchanges with more than 1 percent of total bitcoin volume. Surprisingly, we discovered that the most commonly quoted index used a straight average that gave small exchanges too much influence and then didn’t include many of the actual exchanges.” Mr. Coffman is a leading financial expert with a national practice in valuation and class-action securities-related matters. His team consists of highly-trained professionals in finance, economics, and statistics.
This effort is part of an expanded effort by PYMNTS.com to deliver in-depth research and analysis of the rapidly growing alt-currencies space. “There’s too much cheerleading of alt-currencies from some quarters and too much scorn heaped on them from others,” said Karen Webster. “We’re focused on solid analyses of bitcoin and other alt-currencies. The new indices show our commitment to investing resources to help the payments community understand these new alternative payment platforms.” Webster also noted that PYMNTS.com is planning to extend the indexes to other alt-currencies such as Dogecoin and Ripple. PYMNTS.com launched its highly regarded Bitcoin Tracker on December 5, 2013 and has published 19 weekly issues, the latest of which can be found here.
Economists and other financial professionals have expressed concern over trading in bitcoins. Many economists, including Robert Shiller who predicted the collapse in housing prices, have concluded that the bitcoin trading looks like a classic bubble. Others have expressed concern over the possibility of financial manipulation which is highlighted after the collapse of Mt. Gox, the largest bitcoin exchange.
PYMNTS.com is working with Global Economics Group to track and report developments in bitcoin to assess these concerns. “We’ve seen that many financial markets have been subject to manipulation in recent years including foreign exchange markets,” according to Dr. Rosa Abrantes-Metz, a Director at Global Economics Group and an Adjunct Professor New York University Stern School of Business. “Given the lack of regulation we should really be on the lookout to see whether bitcoin prices are being manipulated for quick riches.” Dr. Abrantes-Metz is widely credited with exposing manipulation of the LIBOR index in an econometric study she published with co-authors in 2008. Reportedly, at one point a pool of bitcoin miners held more than 50 percent of the supply of bitcoins, giving them the power to manipulate prices.
The new indexes, the BTC/PI and the BTC/VI, are available on PYMNTS.com here.
PYMNTS.com is reinventing the way in which companies in payments share relevant information about the initiatives that shape the future of payments and commerce and make news. This powerful B2B platform is the #1 site for the payments and broader commerce ecosystem by traffic and the premier source of information about “what’s next” in payments. C-suite and VP level executives turn to it daily for these insights, making the PYMNTS.com audience the most valuable in the industry. It provides an interactive platform for companies to demonstrate thought leadership, popularize products and, most importantly, capture the mindshare of global decision-makers. PYMNTS.com is where the best minds and best content meet on the web to learn “What’s Next” in Payments and Commerce. PYMNTS.com is a registered trademark of PYMNTS.COM LLC.
About Global Economics Group
Global Economics Group brings together world-class thought leaders, highly experienced testifying experts with experience before courts and regulatory bodies worldwide, former top government officials, ex-industry executives with deep practical experience and a staff of econometricians, statisticians and financial analysts. Our mission is to provide independent and rigorous economic analysis in complex legal, regulatory, and policy matters. Our experts have worked on some of the most significant legal and regulatory matters of the last quarter century and have worked for many leading corporations and government agencies. We serve clients across the country and around the globe from our offices in Boston, Chicago, New York, Sao Paulo, and Mexico City and through affiliates in China and the European Union. For more information, please see (www.globaleconomicsgroup.com).
PYMNTS.com and Global Economics Group, LLC have prepared these materials exclusively for informational purposes based upon generally available information. In no event shall the parties be liable for the use of its contents.
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