CRYX Indexes (Cap-, Equal-, and FLEX-Weighted)

[cryx]

With the advent of indices across the financial market, it seemed obvious that indices on cryptocurrencies had to become topical as more and more capital was transferred to cryptocurrencies and it is estimated that the market capitalization for cryptocurrencies as a whole is of $313 billion as of 17.03.2018 (while remembering the market cap was of $824 billion as of 07.01.2018)

source: coinmarketcap

An emergence of ‘altcoins’ making the cryptocurrency market increasingly complex… that’s when CRYX came into play

Has CRYX constructed complicated indices? Not really. The ones available at the moment can be split into three different ranges:

• Cap-Weighted Indexes
• Equal-Weighted Indexes
• FLEX-Weighted Indexes

For more information on how these indexes are actually calculated, feel free to read the CRYX White Paper on: https://cryx.io/CRYX_WhitePaper.pdf

The three different ranges of CRYX Indexes (https://cryx.io)
For each one of these ranges, different number of constituents have been used in order to construct various indices. The CRYX Team has therefore developed 5 different indices for each range; i.e. CRYX5, CRYX10, CRYX25, CRYX50, CRYX100

"There was a clear intention of constructing different indices using various number of constituents for various index calculation methodologies. For instance, when we created the ‘FLEX-weighted’ index methodology, the main purpose was to assign less weight on the top 3 by market cap cryptocurrencies and more weights to the (much) smaller coins, as it is conspicuous that the market is biased towards a few names" outlines Olivier Al-Khatib, CEO and Chief Data Scientist at CRYX

1. CRYX Cap-Weighted Indexes

Logo for the CRYX Cap-Weighted Index Range

This index range will be tracking the cryptocurrency market based on each individual market capitalization. The major currencies will have larger impact on the performance returns than assets with lower market capitalization.

The Cap-Weighted index range will be particularly useful for investors who want to compare their portfolio against the real shape of the cryptocurrency market. It can be also used to support asset-allocation, research and performance measurements.

Graph depicting the CRYX Cap-Weighted Index Range using the CRYX25 (starting from 2015–01 to 2018–03)

2. CRYX Equal-Weighted Indexes

Logo for the CRYX Equal-Weighted Index Range

This index range offers an alternative from the Market Capitalization range of indexes. The Equal-Weighted index range is purposely erasing the market capitalization factor from each asset in order to achieve a simple goal — all the assets weights are equal.

All the cryptocurrencies will be represented with equal weights is order to avoid concentration of a portfolio into the largest. The Equal-Weighted index range is the perfect definition of the well-known idiom “Don’t put all your eggs in one basket”. The aim is to limit your exposure to the highest cryptocurrencies and by equalizing your holdings investors are expecting their performance to not be only driven by the main cryptocurrencies.

Graph depicting the CRYX Equal-Weighted Index Range using the CRYX50 (starting from 2015–01 to 2018–03)

3. CRYX FLEX-Weighted Indexes

Logo for the CRYX Equal-Weighted Index Range

This third index range is a new and more experimental kind of benchmark. FLEX stands for “EXponential FLattening”. We have developed our own method to calculate an index that is not purely driven by market capitalization but is neither fully equalized.

This particular range of indexes aims to reduce the market value impact of the cryptocurrency and reduce the overbearing weights of the top cryptocurrencies and increase the weights of the smaller ones to increase their contribution to returns.

The FLEX range benefits from both the Cap- and Equal-Weighted ranges. It suits perfectly for those that do not want the top cryptocurrencies such as Bitcoin and Ethereum to drive all their portfolio returns, but also do not believe that much smaller cryptocurrencies should be considered as equally significant.

Graph depicting the CRYX Flex-Weighted Index Range using the CRYX50 (starting from 2015–01 to 2018–03)

A comparison of the three different ranges of CRYX indexes

You now certainly wonder how these three ranges differ. We have now plotted the three indices on a single plot so that users can more clearly see the differences of levels. Below depicts the three indexes for the CRYX25 Series.

As expected, the FLEX-Weighted index finds itself in-between the Equal-Weighted index (that appears, as expected, to be the most volatile index) and the Cap-Weighted (being the least volatile index).

Want to know more about the CRYX Project ?

Feel free to visit the CRYX official website on: www.cryx.io or to contact the CRYX Team on: [email protected]

Join the CRYX Community:

FACEBOOK: https://www.facebook.com/CRYXindex/
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