Megan Matrix

03.07.2018 16:33

Cryptocurrency indices as an alternative way of crypto portfolio diversification

With the increasing popularity of cryptocurrency, major players from the financial services sector, including banks and funds, are coming to the cryptomarket and are seeking professional instruments. One such set of instruments Such instruments are indices similar to those used in the equity and bond markets.

Cryptoindex on the way

Cryptoindex on the way

Historically, equity and bond indices have been used to analyze the overall performance of various sectors of the market. An equity index is used to describe the performance of the stock market or a specific portion of it, and to compare returns of investments. Generally, an index uses a weighted average of stock prices, so larger companies count more in the calculation.

The NASDAQ, S&P 500, and Dow Jones Industrial Average are examples of stock indices. By providing diversified exposure to a broad range of assets, index funds enable investors to track the performance of an entire asset class, rather than having to select individual assets.

Cryptocurrency indices enable investors to monitor the state of cryptomarket with no need to study each cryptocurrency separately. Cryptocurrency indices are based on market capitalization and are recalculated once a day, a week, a month or a quarter.

Investors can invest in the portfolio of cryptocurrencies offered by the index, thereby saving time and money. A large investor can enter the market just after conducting a technical assessment of the index, while small investors can avoid the problem of a minimum deposit. Also, indices serve as an excellent alternative to the complexity of creating your own portfolio for any investment.

CryptoIndex has tapped into the experience knowledge and expertise from the current financial community to ensure the hurdles to its success are minimal. While the number of cryptocurrencies in the world exceeded 1600, Cryptoindex launched a new AI-powered platform, which automatically selects, and rebalances the 100 best coins. It achieves this through the making of a cryptocurrency index through a strict set of rules, filters, and criteria, then feeds the information into unique AI Neural Network, Zorax.

Taking all this information Zorax then applies his own set of calculations, using a range of factors and sources across the web and social media, continuously rebalancing the weights of the coins in the 100 to give a representation of the current market. Cryptoindex100 is positioned to become the industry benchmark for tracking, following and trading the cryptocurrency market. As presented on the official site, the team have been working on the algorithm over the last few years. With the project announced recently, the MVP is now ready.

Bit20 is a cryptocurrency index fund contained in an smartcoin based on a financial platform BitShares. This index includes the top 20 major cryptocurrencies regarding capitalization except for Ripple. On the 21st of each month, Bit20 starts an algorithm that calculates the index, including new positions in it and recalculating the ratio of already existing ones. To date, its rate is $ 700.000. At the moment some users consider the project to be a scam. Users activity at the official thread at bitcointalk is rather low.

The first project is the with a rather close positioning in the compilation is Crypto20 - the first tokenized cryptocurrency index fund. The project is offering a diversification to the top 20 cryptocurrencies is now possible by holding a single token. The project has already completed the ICO in November 2017, and C20 Token has been listed for trade on exchanges.

CRYPTO20 is not a platform, it is a cryptocurrency index fund, according to the Whitepaper. At the same time, the company has been established as a Cayman limited liability company (LLC), and C20 is a utility token, not security, as it is supposed to be for a fund.

CRYPTO20 is the first tokenized hybrid index fund, which includes 20 cryptocurrencies with the highest market capitalization, with a weekly rebalancing. This index fund has its own token C20, which represents the investor's share in CRYPTO20. By purchasing this token, investors are also investing in the cryptocurrencies presented in the index. The maximum weight of the elements of the index portfolio CRYPTO20 is 10%. The current interface is not simple and convenient; it has English, Russian, Chinese and Korean languages localization.

The CAMCrypto30 index is issued by Crypto Asset Management Crypto Asset Management Timothy Enneking. This index was based on the Russell 2000 and FTSE 100 stock indexes. CAMCrypto30 is calculated on the basis of the 30 largest cryptocurrencies by market capitalization. Rebalancing of the index is carried out monthly to take into account price fluctuations of the crypto assets portfolio, and the price is recalculated every 5 minutes. An interesting feature that is available for third-party sites on the official web page allows tracking the index data online.

The CCi30 index (CryptoCoin Index) was launched in October 2017 by a team of specialists led by Igor Rivin (a professor of mathematics at Temple University, a royal professor of mathematics at the University of St. Andrews), Carlo Shevola (a specialist in the field of legal and financial consulting services) and also by Robert Davis (engineer, IT expert and programmer).

The index includes 30 cryptocurrencies with the largest market capitalization, where each of the crypto assets is given a weighting. A full recalculation of the components of the index portfolio CCi30 is carried out quarterly, while the weighting of the components is recalculated every month. The CCI30 index allows creating a balanced portfolio that maximizes profits and minimizes risk and volatility. Today the CCi30 is used by the Cryptos Fund for passive tracking of quotes of cryptocurrencies.

CRIX (CRyptocurrency IndeX) is one of the first cryptocurrency indices. CRIX was launched in mid-2016 by the University of Management of Singapore, in conjunction with the Department of Statistics Ladislaus von Bortkiewicz at the University of Humboldt in Berlin, using the data provided by CoinGecko.

CRIX uses a market-weighted average system, and this index includes 20 cryptocurrencies, which were chosen statistically by the size of market capitalization, and their weight is recalculated in real time. The characteristic of the index is the methodological basis for calculations, which is publicly available. On the basis of which several scientific studies on economics have been written.

The сryptocurrency and tokens indices DeCenter: DCI and DCI50, work on the same principle as stock indices. DCI includes the top 10 cryptocurrencies and tokens with the highest capitalization, in DCI50 - top 50, not including bitcoin.

The list of cryptocurrencies is recalculated quarterly, and it accepts cryptocurrencies and tokens with the highest market capitalization for the previous 90-day period. The initial value of each index was $1000, converted into bitcoin and divided equally between 10 and 50 coins, accordingly. The price of BTC as of January 1, 2015, was $ 314.15, and the value of each index was 3.18 BTC. To date, DCI is 4.18 BTC, and DCI50 is 10.7 BTC

At the end of 2017, Bitwise Asset Management launched HOLD 10, a managed index fund of 10 cryptocurrencies, that is taking into account their market capitalization. Each of the cryptocurrencies presented in the index should be traded on several exchanges, its monthly trading volumes should exceed 30% of the offer within the last three months, it must have a free-floating rate and not be tied to another asset.

The Fund monitors and weights the rate of TOP-10 cryptocurrencies, corrected for inflation of market capitalization, taking into account the offer schedules for the next five years. Cryptomarket news are not taken into account. Revision of the list of coins occurs on a monthly basis. According to the published information, for the first two months of the work, the HOLD 10 Index brought investors 45% of profit. The site is rather rarely updated, and at the moment the platform is available only in the English language.

A team of developers from Russia and CIS countries developed the ICEX Top10 Index at the end of 2017. It consists of equal shares of the ten most significant in terms of capitalization and liquidity cryptocurrencies. At the same time, the capitalization of the cryptocurrency asset should be not less than $500 million, and the average total daily trading volume on all exchanges is at least $10 million over the last seven days.

At the same time, the auction of selected coins should be carried out at five or more trading platforms. The change in the value of the ICEX Top10 index is carried out with each new transaction on trading platforms. In addition, its own separate index is calculated for each coin included in the index ICEX Top10.

Coinbase has announced plans to launch an index fund at the beginning of March 2018, signaling a shift towards asset management services. Coinbase Index Fund will give investors exposure to all digital assets listed on Coinbase’s exchange, GDAX, weighted by market capitalization. At this stage, investing in Coinbase Index Fund will only be available to US-resident, accredited investors. The minimum investment is $250,000.

The product is targeted at institutional investors. At the moment the projects’ team is working on launching more funds which are available to all investors and cover a broader range of digital assets. This will rebalance whenever a new asset is added to GDAX as well as once a year to account for supply changes (as different currencies have different inflation targets). The fund will have a 2 percent annual management fee with no performance fee, which is rare for most traditional investment funds.

DLT10 is one of the first cryptocurrency indexes created by DLT Financial Group and London financial company Tramonex in September 2016. The index includes TOP-10 cryptocurrencies with the highest market capitalization: bitcoin, ether, ripple, stellar, litecoin, dogecoin, MaidSafeCoin, NameCoin, Factom and NXT. The index is recalculated weekly, at 17:00 London time.

DLT10 provides the necessary information value and interaction between the largest cryptocurrencies in the market. The site is not adopted for a wide audience and has a regular landing page structure and does not include language localization. At the moment only English language is available.

The TaiFu 30 Index was developed to estimate market capitalization of the leading cryptocurrencies and positions itself as the world’s first cryptocurrency broad market index. Basically, it is a part of the TaiFu index family, containing two more indices and established by the Americans Tai Zen and Leon Fu in 2017.

The index is calculated daily on the basis of the 30 top cryptocurrencies by market capitalization and therefore represents the largest cryptos on a given day. As developers state, the market-weighted index allows to measure the pulse of the cryptomarket, checking if the market is up or down.

Check out other indices in an interesting compare

Check out other indices in an interesting compare