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With the advent of the IC15 Index, Indices based on Crypto are becoming increasingly popular. The IC15 index shows an index and index of 15 cryptocurrencies with a specified weighted average formula. this index gained a lot of popularity because of the niche it created. Actually, the base behind the formation of this index is pretty simple.
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Crypto Index Why is it good to have a Crypto Index?
Why is it good to have a Crypto Index? • With the advent of the IC15 Index, Indices based on Crypto are becoming increasingly popular. The IC15 index shows an index and index of 15 cryptocurrencies with a specified weighted average formula. this index gained a lot of popularity because of the niche it created. Actually, the base behind the formation of this index is pretty simple. The index takes the weighted average of the market capitalization of the selected cryptocurrencies and presents its variation over a period of time which in this case, is on a continued basis.
What is an Index? • The index is basically considered to be a representation of the overall market condition which is represented by the values of select items which are seemingly the representation of the whole lot. this makes the index an indicator of the overall market performance. • We can take the examples of various indices in this case like the nifty, which is a weighted average index of the share prices off 50 companies which are reasonably considered to be the combined representation Of all these stocks listed on the exchange. • Similarly, the wholesale price index, which is considered to be the barometer of inflation in India, Is calculated on the basis of Changes in the moving prices Of the underlying commodities listed for the purpose. • An index is calculated by the percentage change in the combined value of the assets listed in the representative list, thereby providing valuable insight into the approximate change in the overall market position of the underlying list of assets. • Hence, any change in the index value will denote that the combined value of the listed assets has moved by a certain percentage.
What is a crypto index? • Having an index plays its own role in the market. It becomes very difficult to judge the overall performance ofthe market in bits and pieces. Hence it is always good to have an index that can combine the position and can show the overall change in quantifiable terms. • This is the place where the index plays a very important part. The index comes up with the basic representation of the overall progress of the market.
Generally, the indices are divided into different representations. As we can see in the case of the national stock Exchange (India), the representative index is nifty. However, to depict the changes in the overall growth on a sectoral basis, a number of different indices are used separately. The examples can be nifty smallcap, nifty midcap, and other indices which are specific to the sectors like IT, Health, Banking, etc. These indices represent a specific segment of Industry the performance of which can be judged distinctly from the leaders who are performing extraordinarily. It is always good to have an index to act as a representation of the overall market scenario as it guides us to assess the way the market is going. Also, any Index will provide a reasonable estimate of the overall performance of the Constituents of the market representing the Index. Although news and events have different impacts on different Crypto Assets, there is always a general trend that follows after the news or event. An analysis of the change in theIndex can make the users deduce the right course of action to follow in case of any given situation.
Conclusion Although any Index does not represent the performance of the complete market it gives a fair estimate of the trend that can be analyzed to have a reflection of the way in which the market is going. Also, since the Indices are an easier way to assess the changes and act accordingly, it's better to follow an index for better comprehension. But we need to keep a few things in mind before relying on any Index: 1. The constitution of the Index 2. The basis behind the inclusion of constituents 3. The weights given to such constituents Because, if the investments that you made are having a fair representation in the Index, then only thatParticular Index is good for you. Else, go for something else that reflects your investments fairly. Coin Gabbaris coming up with a number of Indices that the investors can choose on the basis of their portfolio and interest. The Indices will be the true representation of the category wise scenario of the market progress.
