The massive crypto ecosystem is a lot for anyone, let alone investors, to digest.
Here are a few numbers to put it in perspective:
There is no comprehensive framework for understanding the drivers of the returns within that cryptocurrency market, and that's why crypto categorization is being developed.
Crypto categorization offers distinct, non-overlapping sectors giving investors a better window into what's working and what's not in the broader cryptocurrency market.
In the video above, Matthew Sigel, Head of Digital Assets Research, at VanEck, discusses the crypto categorization schemes that include: store of value, the Metaverse, DeFi, infrastructure applications, smart contracts, and more.
The above interview is part of TheStreet's FREE webinar: Beyond Bitcoin and Metaverse: Crypto Categories Investors Should Know, presented by VanEck.
WATCH BELOW: Beyond Bitcoin and Metaverse: Crypto Categories Investors Should Know – FREE Webinar
Editor’s Note: The webinar was recorded on January 28, 2021.
Bob Lang: Matthew, what is digital asset categorization, and why is it so important to sort out the crypto world in this way?
Matthew Sigel: Traditional investors have been trying to measure performance versus benchmarks for a long time, and one of the tools that help them achieve that is by breaking down the equity markets into sectors like technology, financials, consumer staples, telecom, etc. And that not only gives individual investors a chance to express a particular view on the sector, but it also gives diversified portfolio managers better information sources, so that they can understand the drivers of their performance and make adjustments to reflect their views on sectors, or to understand what stocks are driving the performance of an individual sector.
It's much the same in the case of cryptocurrencies. There are more cryptocurrencies than stocks in the US right now, but investors don't have a comprehensive framework for understanding the drivers of the returns within that cryptocurrency market without this type of categorization framework that we've developed.
We've tried to introduce eight different categories that can be used by traditional investors or crypto investors, much the same way that folks use the GICS Level 1 Index from S&P. Those sectors are now trackable on Bloomberg, and we think they give a lot of information to investors to understand the performance drivers within this vast crypto ecosystem.
Matthew Sigel: These eight cryptocurrency categories that we've developed at VanEck are distinct, non-overlapping sectors that will give investors a better window into what's working and what's not in the broader cryptocurrency market. So we think that investors are going to use these categories to express their views on a specific sector within cryptocurrencies, and also to better understand how their diversified portfolio is acting by understanding the differences between how these end markets are acting.
Editor's Note: TheStreet's Zach Faulds produced this video.
