Crypto Market Has Several Benchmarks Showing a Fuller and More In-depth Picture than just Prices to USD
September 16, 2021
As recent crypto correction started to self-resolve, the question still remains what other indicators beyond straightforward, but functionally limited, exchange rates to USD and trading volumes can be obtained. In fact, there are many specialized crypto indices out there. One group of such indices are known to have been developed by CoinMarketCap, the world’s crypto data authority, and calculated and administered by Solactive, an index engineering firm in Germany that is fully compliant with IOSCO Principles for Financial Benchmarks. These are rules-based indices calculated and administered to exacting standards with a start date of December 31, 2018 and a base value of 100.00.
One of them is Crypto200 Index by Solactive. The index is calculated and monitored by Solactive AG, an independent index provider based in Germany. CoinMarketCap calculates market capitalization for each cryptocurrency as “price multiplied by circulating supply.” The circulating supply metric used by CoinMarketCap accounts for locked, reserved or non-saleable coins or tokens that cannot affect the price of a cryptocurrency, and hence are not factored into a cryptocurrency’s market capitalization. Using circulating supply to determine market capitalization for cryptocurrencies is analogous to using public float to determine market capitalization of publicly listed companies. The index showed a spike to around 1,598 on May 11 this year (two years ago it was as low as 146), thereafter diving to 597 in the wake of China financial regulator’s issued ban on crypto mining. Upon that, the benchmark showed much greater resilience than one figured out by looking at just prices of blue chip coins like Bitcoin and Ether. It recovered to around 1,300, and then retreated somewhat to 1,185 as of today.
There is also a very valuable “Crypto200 ex BTC Index”. That one comprises the volume-weighted average price on the top 200 cryptocurrencies excluding Bitcoin and stablecoins, by market capitalization, in USD. The index provides exposure to the broader cryptocurrency market by incorporating the cryptocurrencies that represent the global cryptocurrency market without the influence of Bitcoin, a cryptocurrency dominating over 50% of total market capitalization of digital coins. Its partner, CoinMarketCap, also calculates market capitalization for each cryptocurrency as “price multiplied by circulating supply” (read above). The index is rebalanced on the last day of each calendar quarter. Index constituent weights are fixed on the selection date, which is five days prior to the rebalancing date. At this time, all eligible cryptocurrencies are ranked by their current market capitalization.
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