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Crypto25 Index Composition explained
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Author Topic: Crypto25 Index Composition explained  (Read 3381 times)

Bitfinex_USD

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Crypto25 Index Composition explained
« on: November 16, 2014, 11:29:26 pm »

This thread will explain what rules are applied to come up with the index weights and coin selection.

Coinselection:
Optimally the top 25 ranked coins on http://coinmarketcap.com/ are used for the index, but coins that fail to be liquid enough, will be dropped from the index. This is done to ensure, that one can always invest according to the index and not run into liquidity problems.

Index weights:

Index weights are calculated using their relative marketcapitalisations with the following constraints applied:
  • No altcoin weight can be >10%
  • Index Rank 1-5: >=6%
  • Index Rank 6-10: >=4%
  • Index Rank 11-15: >=2%
  • Index Rank 16-20: >=1.5%
  • Index Rank 20-25: >=1%

The weights are then calculated using excels solver using the above-mentioned constraints.
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Bitfinex_USD

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Re: Crypto25 Index Composition explained
« Reply #1 on: November 16, 2014, 11:35:07 pm »

This weeks weights were calculated in the following way:



The following currencies were excluded to the above-mentioned liquidity problem:
- FuelCoin (FC2)
- Mastercoin (MSC)
- Quark (QRK)
- Zetacoin (ZET)
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monsterer

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Re: Crypto25 Index Composition explained
« Reply #2 on: November 18, 2014, 04:13:59 pm »

Why the funky calculation for the index weights? Can't you just use market cap / (sum of all market caps) ?
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Bitfinex_USD

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Re: Crypto25 Index Composition explained
« Reply #3 on: November 18, 2014, 04:28:59 pm »

Most indices have restrictions, so that there are not big dependencies of certain types of stock branches.

If you check the table I posted above, you can see that an index that capital weighted investments, would basically be a XRP/LTC/BTSX/DOGE/XCP index, as they would have >80% of the weight.
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Bitfinex_USD

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Re: Crypto25 Index Composition explained
« Reply #4 on: November 23, 2014, 02:08:10 am »

This weeks Index weight update was just performed:

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marek3ball

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Re: Crypto25 Index Composition explained
« Reply #5 on: November 27, 2014, 12:20:19 pm »

What should people do based on these data and your graph? Could you write some description from real usage?
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Bitfinex_USD

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Re: Crypto25 Index Composition explained
« Reply #6 on: November 27, 2014, 03:59:27 pm »

If you want to mimic the performance of the Index you can adjust your portfolio every sunday. Then your portfolio will perform exactly the same.

The reason for mimicing the performance is that you can lower your portfolio variance while still participating in the gains of the altcoin markets. Basically you won't ever miss out on any coin that would rise from the bottom to the top. Sure you won't participate fully in the returns, but you will get enough of it. And if you have certain preferences on different coins, you can add extra coins to your portfolio.

In the future there will be an ETF that will invest the index weights automatically.
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Bitfinex_USD

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Re: Crypto25 Index Composition explained
« Reply #7 on: December 01, 2014, 05:37:46 am »

Index was successfully updated.

Also starting from next Week, I will also post the real portfolio gains corresponding to the underlying assets, because I started the ETF.

http://jnxt.org/crypto25/
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Flor

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Re: Crypto25 Index Composition explained
« Reply #8 on: May 05, 2015, 05:54:30 pm »

Hello,

It is said in the description that :

Quote
So the index will go up, if the 25 altcoins will perform better than Bitcoins and will go down, if they perform worse.

Does it means the index will stay flat if both BTC and the index have the same performance ? and is there a reason why you compare it to BTC ?
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