In India, the Cryptocurrency industry is rapidly evolving. Regardless of the country’s complex legal environment, the community looks to be steadily growing as more market participants join. The increased demand has resulted in a slew of pro-crypto initiatives, the most recent of which is India’s very own Crypto index. Furthermore, due to India’s developing Crypto industry, many gamers have shown interest in making investments and providing services to Indian traders. As a part of this endeavour, Cryptocurrency app CryptoWire has established a selected index for Indian traders. The index- dubbed as IC15 index, which measures the efficiency of the world’s 15 most commonly traded Cryptocurrencies, is the first of its kind in the country. 

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India has the Bombay Stock Exchange and the National Stock Exchange for stocks. But now we have our own Crypto index, which will track the performance of the 15 most-traded Crypto’s listed on the Cryptocurrency exchanges worldwide. The IC15 index, developed by a Cryptocurrency super app, will act as a digital market benchmark, providing a broad picture of the increasingly diverse Crypto marketplaces. The index’s ultimate goal is to provide information on index-linked products such as ETFs and Funds. In addition, investors can prevent the danger of investing in a single currency by monitoring the value of a group of Cryptos.  

What is IC15 and how does it work? 

IC15, India’s first global Cryptocurrency index, is a market capitalization rule-based board market index that measures the performance of the world’s most frequently traded liquid Crypto’s. The index will assist Crypto fans and participants in tracking the performance of Cryptos on worldwide exchanges. Ethereum, Bitcoin, Binance coin, Ripple, Cardano, Solana, Terra, Shiba Inu, Dogecoin, Polkadot, Avalanche, Litecoin, Uniswap, Bitcoin Cash, and Chainlink are among the 15 most commonly traded currencies listed on top Crypto exchanges by market capitalization.  

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CryptoWire has formed an Index Committee comprised of domain experts, industry practitioners, and academicians who will choose Crypto’s among the top 400 by market capitalization. The qualified Crypto must have traded on at least 90% of the days during the evaluation period and be one of the top 100 most liquid in terms of trading value. In terms of circulating market capitalization, the Crypto should also be in the top 50. The committee will then choose the top 15 Cryptos. The index will be updated every quarter. 

Why is IC15 required?

IC15 isn't a beneficial element for the average investor in layman's terms. Nonetheless, it will be critical in laying the muse for a slew of Crypto-related products aimed at mainstream markets and authorized investors. According to CryptoWire, Crypto ETFs and Funds will benefit from a Cryptocurrency index. It will serve as a performance measure for fund managers. The IC15 of the underlying crypto market it's a thorough representation of board market emotions. It will also make managing a diverse portfolio a lot easier. In addition, traders in the Bitcoin market will benefit from this index's unique positioning in derivatives trading. 

How to calculate the Index Value? 

This is a pre-weighted index, which implies that each Crypto will be assigned a weightage based on its price per token. The weightage's in the instance of IC15 are as follows:

• Bitcoin (BTC)- 51.57
• Ethereum (ETH)- 25.79
• Binance Coin (BNB) -5.03
• Other Altcoins- The remaining includes each having a maximum weightage of 5.

The divisor will be calculated using the total Market Capitalization of all index members on the base date. The index is normalized during each rebalancing period, which means it is multiplied by a specified normalized factor. The IC15 has a base value of 10,000, and the base date is April 1st, 2018. This indicates that the index has risen 615% to 71,475.18% as of December 31st, 2021. The index will be regularly checked and scrutinized for review and rebalancing every quarter. In March, June, September, and December, the deadline for reviewing has already been fixed at the 15th calendar day. 

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Can index-based Cryptocurrency investment reduce risks? 

Index investing can effectively diversify against risks as a fund invests in a basket of assets against a few limited coins. Nevertheless, the index-based investment may not completely eliminate the risks connected with Crypto assets. For example, in 2018, the IC15 index fell by 50%, whereas other asset classes only fell by 3-4%. Furthermore, the index's total weightage of both Bitcoin and Ethereum is 77%, making it very exposed to any fluctuation of volatility in these two coins. 

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.