YCharts Adds Crypto Data to Analysis Platform

YCharts is making the data—which includes real-time and historical pricing data for the top 25 cryptocurrencies by market cap, including Bitcoin, Ethereum, Rillpe, Bitcoin Cash, and Litecoin—available at no additional cost.

Officials say they expect clients to use the data for monitoring other assets, rather than to support direct investments in cryptocurrencies.

“While I’m firmly in the camp that cryptocurrencies are speculative compared to other investments—especially for our base of largely wealth advisors—we know that our clients are being asked about this by people thinking about putting one or two percent of their portfolio into cryptocurrencies,” says YCharts CEO Sean Brown. “We aim to help people make investment decisions, so we wouldn’t be doing our job if we didn’t have coverage. Our job isn’t to tell people where to dig holes, but to give them picks and axes to dig with.”

Initially, YCharts is providing the data with an expectation that clients will use it to find correlations between cryptocurrencies and other asset classes, such as equities and ETFs.

“I envision us moving towards a mature investment world with cryptocurrency futures… and where ETFs and mutual funds will contain an element of cryptocurrencies,” Brown says. “People like to understand their exposure. For example, just as how if you own a mutual fund that holds Tesla stock, you might want to research and understand everything about Tesla, then people will want to understand their exposure to cryptocurrencies within a fund and across their whole portfolio.”

This view is borne out by a new survey of more than 800 investors worldwide by financial advisor deVere Group showing that 62 percent of investors with no current exposure to cryptocurrencies would consider including them in their portfolios, while 71 percent of investors who already hold cryptocurrencies plan to increase their exposure over the next 12 months.

While acknowledging that “cryptocurrencies remain a gamble,” deVere CEO Nigel Green says that “an increasing general awareness of cryptocurrencis and how they work, plus a growing sense that cryptocurrency regulation is now inevitable, are perhaps the main reasons why such a high percentage of people are now open to looking at the possibilities of crypto for their portfolios.”

However, with no underlying assets or central bank backing to determine their value, cryptocurrencies defy traditional fundamental analysis, with value increasingly being driven by factors such as sentiment around regulation, macroeconomics or geographic issues.

“It’s a very different set of data—it really comes down to fundamental data. If you look at a stock, ETF or mutual fund, somewhere underlying each of those are financial statements, dividends and free cash flow, and all the factors that guide people to apply PE ratios to come up with a fair price,” Brown says. “But with cryptocurrencies, the whole concept of fundamental data is yet to be defined. The market hasn’t yet matured enough to define what the fundamentals of cryptocurrencies are.”

For example, when behavioral analysis provider MarketPsych unveiled its own suite of cryptocurrencies earlier this year, the vendor essentially created its own fundamental data, comprised of sentiment for various factors relating to cryptocurrencies and their marketplaces, sourced from investors’ social media comments.

MarketPsych monitors 43 different types of sentiment, ranging from general sentiment and factors such as optimism, fear, uncertainty, price direction and volatility to cryptocurrency-specific factors such as adoption and adoption forecast, criminal activity, innovation, sentiment relating to a cryptocurrency’s code or development team, transaction speed, whether a currency is likely a scam or a potential target for a crackdown by regulators, and even one called “noobs,” which monitors the level of “newbie” or naïve investor activity—based on the perceptions of people talking about them online.

But still, building the sentiment indexes for cryptocurencies was a whole new challenge compared to MarketPsych’s existing coverage of traditional financial markets and their taxonomies.

“Sentiment for cryptocurrencies is different. Obviously there are negative words, like ‘bad,’ but there are also more sophisticated terms, like ‘vulnerable’ code or ‘compromised’ code or ‘wallet,’ or phrases like ‘can’t be used as payment’ or ‘slow transaction speeds.’ And the majority of cryptocurrency users are not native English speakers, so—even though these groups have their own terminologies—the language can be somewhat distorted,” said MarketPsych CEO Richard Peterson, adding that recognizing the most useful terms to follow is “an iterative process.”