Explained: India’s Leading Crypto Index and What It Means for Investors in India

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NEW DELHI: India owns the Bombay Stock Exchange and the National Stock Exchange, but we now have our own Crypto Index, which will monitor the performance of the 15 most traded cryptocurrencies that are listed on the crypto exchanges in the world. The IC15 index, launched by the global crypto super app, will serve as a benchmark in digital markets that will offer a diverse representation in the increasingly diverse cryptocurrency markets. The overall objective of the index is to offer an overview of indexed products such as ETFs and funds. . By tracking the value of a group of cryptocurrencies, investors can avoid the risk of investing in a single digital currency. What is the cryptocurrency index?

The cryptocurrency index known as IC15 was launched by the global cryptocurrency super app Cryptowire. It is a general market index based on market capitalization rules, which tracks the performance of the top 15 widely traded liquid cryptocurrencies, in terms of market capitalization. The index includes a governance committee (CIG). It includes leading field experts, academics and industry practitioners. These experts will monitor, maintain and administer the rebalancing of the top 15 cryptos each quarter. The base date is April 1, 2018, while the base value of the index is set at 10,000. This index captures more than 80 percent of market movements. How is IC15 built? The index will select the cryptocurrencies from the top 400 coins based on market capitalization. The qualifying cryptocurrency must have been traded at least 90% of the days during the review period and be among the 100 most liquid cryptocurrencies in terms of trading value. The cryptocurrency is also expected to be in the top 50 in terms of outstanding market capitalization. Which cryptocurrencies have the maximum weight? The top 15 most widely listed cryptocurrencies on crypto exchanges include Bitcoin, Ethereum, Litecoin, Binance Coin, Chainlink, XRP, Bitcoin Cash, Cardano, Solana, Terra, Avalanche, Polkadot, Uniswap, Dogecoin, and Shia Inu in index IC15. Among tokens, Bitcoin has the highest weight, at 51.57, while Ethereum holds 25.79 weight on the index. Binance Coin came in third place with a weight of 5.03.

How is the value of the index calculated? The value of the index is equal to the total sum of the outstanding market capitalization of the basket of the index divided by the divisor of the index, then multiplied by the base value of 10,000. The divisor is calculated over the basis of the outstanding market capitalization of all Constituents of the Index. “A cryptocurrency index fund is a way for investors to track the value of a group of cryptocurrencies involved in an index. The value of a cryptocurrency index fund is linked to the combined total value of the cryptocurrencies that it follows, ”explained Vinay K Mayer. , Marketing research and consulting @ Asia Research Partners LLP. And what is the main objective behind the index? The index allows crypto enthusiasts, investors and investment managers to monitor the performance of cryptocurrencies in global markets. IC15 is the premier index in India that can serve as a benchmark of the cryptocurrency market and a performance benchmark for fund managers to create index linked products like index funds, ETFs, etc. Its main objectives are • An overview of crypto mining. • Be the true benchmark and mirror of the underlying crypto market • Present an easy to follow solution to having a diversified portfolio. • Act as a performance benchmark for fund managers. • Unique index positioning for efficient derivatives trading in the cryptocurrency trading market. Eligibility criteria: ◆ The 400 best coins in terms of market capitalization ◆ Only cryptocurrency coins are taken into account ◆ Stable coins are not eligible. ◆ The Index Committee decides on the final basket of IC15 and may consider a mid-term review of the Index basket in exceptional circumstances The deadline for the review period will be the fifteenth calendar day of March, June, September and December. Jigish Sonagara, Managing Director and CEO, CryptoWire. How has the index performed so far compared to other market indicators? The IC15 increased by 138% in 2021, against 24% for the Nifty 50, – 3% for gold and 27% for the S&P 500. 2020 saw the index increase by 294%, but in 2018, the IC15 index fell by 50%. In 2018, the other asset classes only experienced declines of around 3 to 4%.

How an Index Works An index is a way of tracking the performance of a group of related assets. It is essentially an economic barometer that measures changes in market value, performance and changes in value depending on currencies, stocks, bonds or all markets. Over the past few years, cryptocurrencies have grown in popularity and acceptance. These new digital currencies work mainly thanks to blockchain technology. Currently, the index is based on a base value of 10,000 (set at April 1, 2018) and derives its value from various factors, such as volume of exchanges on exchanges, futures contract activity, changes market capitalization, etc.

“Looks like an index that claims to capture over 80% of market movements could be an essential tool for tracking accepted cryptocurrencies, if not just one of those coins. As they have become more common, allow investors to accessing it via an index will likely provide much needed transparency in terms of how each coin behaves individually or as a group with other types of investments within a diversified portfolio ”, said Vinay K Mayer, Marketing Research & Consulting @ Asia Research Partners LLP. Biggest risk? The cryptocurrency market is very volatile. For example, Ethereum, at the start of 2017, the price was close to around $ 40, which is then rose to around $ 400 and it came down to around $ 150- $ 200. ”If you look at the weighting of the index, only two cryptocurrencies-Bitcoin (51.57) and Ethereum (25.79) make up a part majority. This makes the index extremely vulnerable to price movements in both cryptos, “a financial planner said, on condition of anonymity. In addition, there is no regulatory support for the crypto, which exists in d other investments, he added. How does India benefit from a crypto index? Index-based investing leads to diversification which is better than investing in individual tokens. ” A crypto index would track some of the major cryptocurrencies by market cap and, therefore, eliminate random tokens without a fundamental value or viable use case. Indian investors are traditionally more risk averse than our Western counterparts. Therefore, a crypto would be an ideal benchmark for Indian investors living in the cryptocurrency market, ”said Edul Patel, CEO and co-founder of Mudrex. “The creation of a balanced cryptocurrency index in India would serve as the basis for different types of financial products, such as ETFs and crypto funds. This will help provide benchmarks for fund managers,” said Mayer. What does this mean for existing crypto investors? ”For existing investors, the index will help them understand the details of the entire crypto ecosystem and will also offer solutions for diversified crypto investments. … As the crypto market is always subject to speculation, this is a big step in helping the evolving crypto community gain a detailed understanding of the basics of the crypto market tracking index as well as an impression of the trends. global markets, “said Shruti Kaushik, blockchain writer and marketing expert. But in the absence of regulation, can fund managers really launch crypto funds? Investing and trading in crypto assets is allowed in India, but the laws are unclear on how they are regulated and taxed. As of last week, the regulation of the marc hey Securities and Exchange Board of India (Sebi) has banned local mutual fund players from making crypto-related investments until there is a law for those digital assets. The Center is in the process of tabling a cryptocurrency bill in Parliament, which is expected to be presented in the next budget session. Sebi’s warning came after asset management firm Invesco Mutual Fund delayed the launch of its blockchain fund – the first of its kind in India – due to legislative uncertainty. Likewise, Navi Mutual Fund, backed by Sachin Bansal, has filed an offering document with Sebi for a blockchain index fund of funds. The program will be linked to the Indxx Blockchain index, an indicator of the performance of companies linked to the blockchain ecosystem. “The gray area of ​​regulation remains when it comes to launching crypto mutual funds. As these regulations become clearer, we can expect fund managers to offer funds. crypto, ”Patel said.

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