Global cryptocurrency app Cryptowire has just launched India’s first crypto index. Named IC15, the index will track the market cap and liquidity of the top 5 global cryptocurrencies, according to a company statement.
This allows India to have its own crypto benchmark – while simultaneously allowing financial institutions to create crypto-based ETFs, index funds, and more. These allow investors to ride the crypto wave, while maintaining risk aversion through a highly diversified investment.
How Does IC15 Function?
For starters, the IC15 index is handled by an Index Governance Committee (IGC). Comprised of domain experts, academics, industry practitioners, and other crypto professionals, this core team is responsible for monitoring, maintaining, and administering rebalances for the top 15 cryptocurrencies, on a quarterly basis.
The base date for IC15 is 1 April, 2018 while the base value of the index is set at 10,000. It also specifically excludes stablecoins such as USDT.
Which Cryptocurrencies Feature on IC15?
Based on market capitalization, the index is designed to select cryptocurrencies from the top 400 coins available.
According to Cryptowire, the eligible cryptocurrency should have traded on at least 90% of the days during the review period, and be among the 100 most liquid cryptocurrencies in terms of trading value, as well as the top 50 in circulating market cap.
For the Jan-March quarter of 2022, IC15 will take up the following split between currencies:
As we can see, Bitcoin and Ethereum take the lead at 51.57% and 25.79% each, followed by Binance Coin at a distant 5.03%.
What Kind of Returns Can We Expect From IC15?
Given the highly volatile nature of crypto markets, IC15 is still something most people would consider a risky investment.
That said, this four-year comparison table shows promising results for IC15. The index rose 138% in 2021, compared to 22% Sensex and 24% Nifty performances.
Crypto certainly has its drawbacks – no doubt. While India’s crypto bill remains deadlocked within parliament for the time being, the actual value of currencies has been fluctuating wildly – reports indicate a staggering 20% drop in BTC value compared to just the last week of 2021. Add to this the fact that crypto, unlike traditional investments, has no regulatory support.
This said, relying on indexes as an investor can greatly reduce your overall risk. “Indian investors are traditionally more risk-averse compared to our western counterparts,” shared Edu Patel, CEO & Co-founder of auto-trading platform, Mudrex. “Creating a balanced cryptocurrency index in India would serve as a foundation for different types of financial products, such as crypto ETFs and funds.”
What Are IC15’s Long-Term Goals?
As suggested above, the main goal of IC15 is to allow Indian fund managers to create crypto–based variants of index funds, ETFs, etc.
While IC15 does give managers an exciting new avenue to follow, it also allows for deep insights for enthusiasts and investors alike. Apart from allowing investors to easily manage a high-quality, diverse bunch of crypto, it also facilitates performance analysis for the entire crypto ecosystem.
The first hurdle for IC15 to cross is regulation. While this remains a grey area, with the parliament budget session due to start at the end of January, we’re expecting the pace to pick up.
Hopefully, the day we can run easy index-based crypto portfolios isn’t too far away.
(Image Sources: Unsplash, Times of India)
