PYMNTS.com, an information provider on the future of the payments industry, announced on Tuesday the launch of the real-time Bitcoin Price Index to track the trading price of bitcoin, a controversial yet increasingly popular alternative currency.
“Alternative currencies are a fast growing part of the payments landscape,” PYMNTS.com President Karen Webster said. “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.”
PYMNTS.com partnered with Global Economics Group, which developed the PI.
“We calculated a volume-weighted price index using the real-time bid-ask spreads of all exchanges with more than one percent of total bitcoin volume,” Global Economics President Chad Coffman said. “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.”
Additionally, PYMNTS.com launched the Bitcoin Volatility Index to track the volatility of the currency and other alternative currencies compared to traditional currencies. The BTC/VI indicated bitcoins were 18.4 times more volatile than the euro in the first quarter.
Webster said the indices were developed to provide objective in-depth research and analysis of alternative currencies.
“We’re focused on solid analyses of bitcoin and other alt-currencies,” Webster said. “The new indices show our commitment to investing resources to help the payments community understand these new alternative payment platforms.”
PYMNTS.com plans to expand the indices to other alternative currencies like Dogecoin and Ripple, which have, like bitcoin, come under scrutiny from some in the financial services industry who have expressed concerns regarding risk and manipulation.
“We’ve seen that many financial markets have been subject to manipulation in recent years including foreign exchange markets,” Rosa Abrantes-Metz, a director at Global Economics Group and an adjunct professor New York University Stern School of Business, said. “Given the lack of regulation we should really be on the lookout to see whether bitcoin prices are being manipulated for quick riches.”