Crypto10 Index trading
The Crypto10 Index, also known as or the B10 index, as it is also know is provided run by the a company named BITA. It, represents the performance of the top 10 largest cryptocurrencies in the market, based on market capitalisation.
By monitoring the top blockchain projects in the industry, the Crypto-10 Index is widely considered as the benchmark cryptocurrency index for the cryptocurrency the crypto market. By tracking this index, global investors can quickly gauge the volatility and sentiment of the overall cryptocurrency market.
The BITA10 Index 10 was first introduced on the 20th of September 2018, by BITA, a Germany-based Fintech company that is responsible for providing enterprise-grade indexes, data and infrastructure to institutions operating in the investment space. The Crypto10 Index is calculated in US dollars (USD), and it is calculated daily, with no exceptions. This calculation takes place between 00:00 and 23:00 UTC. The B10 Index was launched with a standardised baseline value of 5000 points and its value has since mirrored the performance of the overall cryptocurrency market. Ultimately, this index can also be used as a benchmark for a wide variety of financial and non-financial products.
Index Composition and Calculation
To calculate the price of the Index, BITA uses data from a variety of sources, including trading platforms, regulatory agencies, token issuers, real-time data from approved 3rd party sources and any related data from service providers. The B10 Index is measured in points and it tracks the prices of the top ten tokens in the market based on trading volumes and market capitalisation, which is, the token price * the number of units in circulation.
In order to be included in the index, the following conditions must be met:
- A coin or token must be traded on at least two exchanges in order to be considered. Tokens traded in multiple exchanges are often accredited with market acceptance.
- A coin or token must have been traded for at least 3 calendar months.
- A coin or token must have, at some point, been in the top 200 tokens by market capitalisation.
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The methodology used to calculate the Crypto-10 index occurs as follows:
- Only tokens or coins that are traded exclusively at exchanges, which have passed quantitative and qualitative requirements are taken into consideration and ranked by market capitalisation.
- The top 10 tokens are then selected as the initial components of the BITA10 Index. Composition buffers are used in order to achieve this fixed number of components and this ensures the stability of the index. The end result is that the Crypto index accurately represents the performance of only the largest and most traded tokens in the world.
- The largest positions, based on market capitalisation, are capped at 25%, to ensure greater diversification.
- BITA evaluates changes in rankings at each reconstitution period, taking into account a 30% selection buffer. This means that any token that falls below the 13th position is removed and replaced by an incoming token. Any token that successfully grows into the first 30% of the ranking, are exempt from the selection buffer and they enter the index automatically.
The cryptocurrency market is very dynamic and to reflect any changes that may occur, BITA provides a wide range of data. At 00:00 UTC daily, the opening price of the BITA10 index is released, while the index settlement values are released daily between 11:50 – 12:00 UTC. At 23:00 UTC, the closing price of the index is released together with the index value, the composition of the index with weights and prices. The Cryptocurrencies Index also rebalances quarterly so as to delete or add eligible assets.
History of the Cryptocurrency Market
In 2009, there was only one cryptocurrency, Bitcoin, which has stood the test of time and remains the primary gold standard for the overall industry. There are now over 2000 altcoins but only a dozen have proven to be sustainable projects worth serious investor money. The idea of decentralisation propped up the idea that cryptocurrencies represent the future of money. This subsequently led to hype and interest beyond the investing public. Adoption and popularity of cryptocurrencies hit a high in 2017 with Bitcoin, the leading cryptocoin, hitting an all-time high of circa $20,000 in December of that year.
But the market always faced regulatory risk, and 2018 was the year serious efforts were made by various government agencies to clip the wings of assets that seemingly had no wings. On January 2018, major tokens lost more than 40% of their values and were suppressed throughout the year. Yet, regulation was not a curse to the industry entirely. Firstly, when the market was in its infancy, the headlines were of a blanket ban. So, the shift to regulation meant there was appreciation of the disruptive potential of the industry and the need to deal with possible negative effects. Secondly, regulation headlines have also helped generate interest in the cryptocurrency space, attracting more participants and fuelling adoption.
Most regulators now consider crypto assets as legitimate financial assets. Crypto ETFs (electronic-traded funds) have already been launched in major exchanges around the world. Also, in the US, a previous crypto critic, Bitcoin futures are already trading at the Chicago Board Options Exchange (CBOE). CBOE has also consistently lobbied the US Securities and Exchange Commission (SEC) to soften its stance on crypto assets. As of August 2019, there were proposals to launch tradable crypto ETFs, with the SEC expected to make a decision before the end of 2019.
Cryptocurrencies have come a long way and headlines will continue to excite investors focused in this space.
Factors Influencing the Overall Price of the Crypto Market Index 10
Due to the composition of the Crypto Market Index 10 and the general nature of the crypto market, various factors may impact its price level.
The crypto market is headline sensitive and will particularly react to loud news from regulatory agencies, such as the US’s SEC and China’s CSRC, as well as other relevant headlines, such as hacks on major crypto exchanges. Other news that may impact the index’s price are mining and trading legislation in different countries.
The index will also be heavily impacted by significant price shifts of one of its constituent components, especially Bitcoin. As stated above, Bitcoin acts as the gold standard of the cryptocurrency market, and it usually provides the cue for price direction for other coins and tokens.
Bitcoin is often known as a safe haven asset. This means that much like Gold when markets are in turmoil and all of the money is running away from the US dollar and the stock market in a “risk on” environment, it tends to run towards the safe haven assets, Bitcoin included. If you look at Bitcoin on a price chart in comparison to the USD, you will often see it inversely correlated. This is not a hard and fast rule, however it is common.
Bitcoin like Gold is a good store of wealth and due to anonymity can be a great way for people to get money out of a restrictive country quickly. When this happens, it pushes up the price of the Bitcoin.
Why Trade the Crypto Market Index 10?
There are many benefits to trading cryptocurrencies and the Crypto Market Index 10:
- Liquidity – The index is highly liquid due to the amount of activity generated by the individual constituent assets.
- Lower volatility – The main risk of the crypto market is higher than normal volatility. With a crypto index, the volatility is lower, making it more predictable than individual assets.
- Diversification – The Crypto Market Index 10 offers investors a great way to diversify their crypto portfolio without increasing their risk exposure.
- Vast news coverage – By tracking the top 10 crypto assets in the world, the index receives wide coverage and interest among the global investing public.
Crypto Market Index 10 Trading Information
- MT4 Symbol: CRYPTO10
- Typical Spread: 1% over-market
- Minimum Nominal Trade Size: 0.10
- Margin: 10%
- Trading Time: 24/7
- Exchange: BITA
Why Trade the Crypto Market Index 10 with AvaTrade?
Trade the Crypto Market Index 10 or any other individual cryptocurrency CFDs at AvaTrade and enjoy the following benefits:
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- Leverage – Enjoy leverage of up to on crypto assets.
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Crypto 10 Index Trading Main FAQs
- What is the Crypto 10 Index?
The Crypto 10 Index is a market capitalization weighted index of the top 10 cryptocurrencies. Because it is composed of the top ten cryptocurrencies it is widely accepted as a benchmark for the strength or weakness of the broader cryptocurrency market. It was created by Crypto Finance AG and launched on December 31, 2016 with a value of 1,000. As of June 2020 it is managed and calculated by BITA GmbH and has a value around 2,650. Because cryptocurrencies often move up or down in tandem it isn’t unusual for this index to make very strong moves in either direction.
- Should I trade the Crypto 10 Index?
Because it is tracking the ten largest cryptocurrencies the Crypto 10 index is an excellent choice for those who want to trade the cryptocurrency markets, but want to try and avoid some of the volatility that comes with trading individual cryptocurrencies. The combination of 10 different assets smoothes out moves in the index somewhat, although it can still be quite volatile in comparison with traditional assets and markets. Traders also appreciate the liquidity found in this index and the diversification it provides.
- What is the best strategy for trading the Crypto 10 Index?
There are many different strategies that can be used to trade the Crypto 10, but sometimes the simple strategies are also the best. That’s the case with the Crypto 10. A simple strategy that works well for day trading on the 2-hour charts using a 10-period moving average is as follows: wait for price to rise and either touch or move above the 10-period moving average. The candle should also be a red candle, that is the closing price is lower than the opening price. When these two conditions are met place a limit order 2 points above the highest point of the red candle, with a stop at the bottom of the red candle.
Cryptocurrencies are an exciting way to enter the financial markets and they offer a range of trading opportunities. Join AvaTrade now and trade with a leading broker in the industry who provides all the tools, service and features to trade effectively.
Join AvaTrade now and become a part of a leading broker in the industry who provides all the tools, service and features to trade effectively.