The #AltData and #DeFi Nexus

The 2022 public policy cycle regarding the DeFi and cryptocurrency space is just getting warmed up for the year. US policymakers open the year with a stablecoins/banking sector gambit while the ECB continues to intensify its efforts to provide cryptocurrency issuers with competition by promising clarity on sovereign digital issuance for the globe's third largest reserve currency. Policymakers in Singapore, Australia, and Japan also continue their slow and steady march into the modern era for payments and currency.


Markets will not wait for the policy process to conclude. Portfolio managers and other Institutional investors are preparing to enter cryptocurrency markets at scale during 2022, joining major banks like JPMorganChase that pioneered the stablecoins space years ago.


Unlike retail investors, institutional investors have formal processes for evaluating and pricing risks. They require concrete, objective data for decisions at scale. As noted in our free LinkedIn Newsletter (AltData and Volatility Frontiers), alternative data provides investors with the opportunity to evaluate new and familiar markets in new ways.


Nowhere is this more true than in the DeFi context. These markets are so new that long-dated historical data does not exist. While some historical payments data may be useful at the margins, privately issued digital currencies create their own dynamics which render historical data of limited utility.

More importantly, the cryptocurrency and DeFi space is uniquely exposed to public policy risks over the next 12-36 months. The wild west days of operating in a relatively regulation-free zone are about to end. The issuance of sovereign digital currencies by advanced economies will also generate new competitive dynamics for existing cryptocurrencies and stablecoins.

Fortunately, our patented process provides institutional investors with the capacity to measure and manage their exposures to these public policy risks. Recent backtests show this data provides advance notice of market volatility.


Why? Because markets are not immediately efficient. It takes time for markets to spot and price public policy risks. Our 9+ layers of patented analytical automation speeds access to actionable information using publicly available inputs. Check out the video below for details.

So whether they access the hard data in our broad PolicyScope data base on the Bloomberg Enterprise Access Point, our targeted Digital Currency Volatility Signals (DCVS 1: Cryptocurrency; DCVS 2: CBDC), or through our V3 app for the Bloomberg Terminal ({APPS PLCY <GO>}), DeFi Investors now have the capacity to make data-driven decisions regarding their exposure to public policy risks.


Those that measure public policy volatility today will be better positioned to benefit from policy-related market volatility tomorrow using PolicyScope data. Our third-party backtests back up this assertion with concrete data.

 

About BCMstrategy, Inc.: BCMstrategy, Inc. uses award-winning technology to measure public policy risks objectively using 9+ layers of patented analytical automation. We convert the words of the public policy process into numbers objectively, automatically, and daily so that investors can make better decisions about their exposure to public policy risks using hard data. The underlying data (including 3 years of historical multivariate time series data) is available to quantitative analysts exclusively through the Bloomberg Enterprise Access Point. Specialized signals (single factor quantitative + verbal data) are available via API for the following issue areas: cryptocurrency policy (DCVS 1) , central bank digital currency policy (DCVS 2) , and climate-related disclosure policy.