Are World Crypto Indexes Already Here?
“With index, the know-nothing investor can actually outperform most investment professionals”— Warren Buffett.
Why Indexes Are so Important?
The main goal of the index is to create an indicator by which investors could characterize the general direction and “speed” of movement of stock quotes of coins of a certain industry.
Looking at the dynamics of the indices, any participant in the exchange trading can understand the influence on the quotations of various factors. He can soberly assess the overall trend of the movement without having to assess the position of all companies.
An index is your eyes and ears.
The first index in history was the index created by Charles Dow in 1884. At that time he was a journalist and he was deeply interested in technical analysis.
His calculation was based on the quotes of the 11 largest at that time the US transport companies — the index was called the Dow Jones Transportation Average.
But indexes also have turbulent times.
The most significant drop in the index was caused during the Great Depression in the early 1930s, more than seven companies were replaced in the index, and a little later eight more. The index survived more than four bear attacks, which cost about a third of the total price.
But the highest percentage drop in the index occurred on Black Monday 1987, when the Dow Jones lost almost 22.6%. On the first trading day after the September 11 attacks, the index fell by more than 7.1%. People were in a panic. Many began in a hurry to sell their shares. But is this justified?
One should always remember that the market is primarily emotions, not numbers.
Is cryptocurrency the same?
In fact, yes, cryptocurrencies are shares of the same companies in digital form. With the arrival of many institutional investors on the market, demand for indices has arisen. And Cryptomarket could not respond to this demand.
Several companies immediately stated that they were developing indexes. But what’s different between them?
CryptoIndex which has tapped into the experience of 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 2000, 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.
At the moment, access to the platform is free.
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.
Bit20 is a cryptocurrency index fund contained in a 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 with a rather close positioning in the compilation is Crypto20 — the first tokenized cryptocurrency index fund. The project is offering 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 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.
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 is 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 the profit. The site is rather rarely updated, and at the moment the platform is available only in the English language.
In conclusion, I can add that no matter how successful an investor you are, the use of professional tools like crypto indices reduces your investment risks. Be patient and successful investment for you!