Several new reference indexes were announced by Fundstrat Global Advisors this Friday, to help track how well Bitcoin and other cryptocurrencies are doing in the market.
The new indexes were created with a the goal “to track the performance of the underlying markets and provide relative performance and volatility metrics.”
The hopes are that the indexes will also be able to “create a framework for institutional investors to better understand the evolution and behavior of crypto-currencies. Moreover, these are essential benchmark performance indices enabling investors to design portfolio strategies.”
The new indices are as follows. •
1. FS Crypto FX 10 (large-cap): An index comprising of the 10 largest cryptocurrencies.
2. FS Crypto FX 40 (mid-cap): An index comprising of 11 to 50 of the largest cryptocurrencies.
3. FS Crypto FX 250 (small-cap): An index comprising of 51 to 300 of the largest cryptocurrencies.
4. FS Crypto FX 300 (top 300): An index comprising of all 300 currencies versus FS Crypto FX Aggregates.
One of the main strategies of using these indexes is that with bitcoin representing the largest upside for investing, it will be easier to track and research the pricing of the coin. In addition, “best Sharpe-ratio is holding the top 10 largest currencies and rebalancing quarterly.”
The company also noted that “adding even a small allocation of 2% to crypto-currencies enhanced a blended portfolio return by 226bp annually (past year) (past performance not a forecast for future performance.”
The firm has also stated that it prefers to use the larger-cap cryptocurrencies given that they have stronger prices and less volatile swings. Hopefully, these new indexes will help to give investors more information in a market that can sometimes be extremely confusing. With new indexes, information will become even more widely available.