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Cryptofixing has been launched, and it is a service that will determine the daily unique reference price for Bitcoin through “fixing” techniques.
Cryptofixing: the service that will offer the fixing of the price of Bitcoin
The service is offered by CryptoValues, and establishes a daily Bitcoin price value that can be used as a reference point for institutional investors in particular, as well as retail investors.
For example, yesterday, 3 April 2022, the price of BTC fluctuated on the main financial markets between €42,842 and €41,316, while the daily value calculated by Cryptofixing was €41,499, just below the arithmetic average between the high and the low.
Thus, fixing enters the world of cryptocurrencies, bringing definitive prices as it already does for gold, silver, Euribor and fiat currencies.
Such definitive daily prices constitute a fixed point within a very volatile market like that one of the cryptocurrencies, defining a value of reference usable for example in the calculation of the Net Asset Value (NAV).
The NAV is important for the evaluation of the total return of the underlying asset, and for the realization of derivative financial products, as well as for the calculation of capital gains and losses for tax purposes.
CryptoValues uses data acquired from exchanges such as Bitpanda, Cex.io, Kraken, Bitstamp, and The Rock Trading of Italy to determine this price. CryptoValues is an Italian consortium, based in Milan.
CryptoValues: calculation method for the Cryptofixing service
The calculation is made using daily data for the BTC/EUR exchange pair, and the selected exchanges were chosen both because they host this pair and because they are compliant with anti-money laundering regulations and European legislative standards.
The calculation method involves calculating the arithmetic average of the “bid” and “ask” values for each of the 6 reference exchanges at 00:00 UTC each day. From these 6 averages, the highest and lowest are excluded, and then the arithmetic average of the 4 remaining averages is made. This last figure is the fixing.
Advantages of Cryptofixing
The introduction of Cryptofixing should make it easier to operate the Bitcoin market especially for financial institutions that need accurate, secure and incontrovertible data. Crypto markets are still poorly organized as a whole, so alternatives risk creating problems of data clarity and reliability.
CryptoValues CEO Federica Rocco said:
“Through Cryptofixing, for the first time ever, we are equipping institutional and professional investors, as well as the retail public, with an element of certainty in order to generate confidence based on objective criteria. We offer a reference value that can be compared by different players in the crypto sector, but also by players in traditional finance. Cryptofixing offers an innovative tool for those who work or would like to work with cryptocurrencies, but feel the need to have a benchmark obtained by averaging the fluctuations and differences in prices between the various exchanges”.
If this initiative were to lower the barriers to entry into crypto markets for institutional investors, or solve some of the technical problems currently facing institutions that want to trade in these markets, it could be a game changer.
Despite the fact that there are now many institutional investors operating in crypto markets, only a very small percentage of institutional investments are currently allocated to Bitcoin. Therefore, this is potentially a game changer that could have significant benefits, especially in the medium to long term.