Crypto-currency market has appeared only few years, but during these time hundreds of altcoins with different destinies and equally different perspectives have appeared. The number of all existing coins exceeds one thousand, which is comparable to market of a small country.
But far from all of them are actively developing projects – only about 70 altcoins have a capitalization of more than 1 million dollars. The market of crypto-currencies is still in the shade of bitcoin, but the share of altcoins is gradually growing.
Such a booming market with high growth potential and low entry threshold, of course, attracts the attention of potential investors.
How to evaluate the profitability of investing in top-level crypto-currencies? What is more profitable, invest in bitcoin or in altcoins with a large capitalization? Is it possible to evaluate the market of altcoins using an index, as it has been done for more than a hundred years for the securities market using the Dow Jones index? How to diversify risks and create a balanced portfolio of crypto-cash assets, reducing volatility?
In order to get an answer to all these questions, you need a lot of time, most of which will be spent on studying alternative crypto currency. After all, it’s obvious that there are two big differences between the situation when you buy very expensive Ethereum coins or an unknown NN-coin. In the first case, with a fall in the medium term, the chances of growth in the future are much higher and, to some extent, obvious. Therefore, it is very important to understand the block / altcoin system in which you are going to invest.
What alternative we have?
One of the projects that allows answering the above questions is Coinoindex, which is the first analog of the Dow Jones index for crypto-currencies and at the same time gives the opportunity to invest in 20 top altcoins.
The index is constructed by analogy with the Dow Jones index for shares, reflecting the change in the value of the portfolio of 20 Crypto-currencies with the largest capitalization. The portfolio is updated once a week. The value of the portfolio is calculated in real time and displayed on the Coinoindex website. It is easy to see that the volatility of the index is much less than the volatility of its individual components. The shape of the curve since the summer of 2015 qualitatively reflects the dynamics of the market development, it is clear that altcoins are inferior to bitcoin in terms of profitability, but a turning point has emerged, and at the moment the trend is growing.
Thereby Coinoindex simultaneously shows cryptocurrency market and emerging trends, making it possible to correctly estimate the time of entry into the market. Indices similar Dow Jones play a large role in capital markets theory, for example, the Dow theory predicts a certain pattern to change the state of the market as a whole and index it describes.
Investing in indices (index funds), the lion’s share of all transactions in the stock market, and in this sense altcoins market is no different from the stock market – investing in Coinoindex, by diversifying the risks and invest in the current trend of the entire market, and not in a separate altcoin.
Currently, Coinoindex is traded on the Poloniex exchange, where it can be bought and sold for bitcoins. Thus, Coinoindex is not only the first crypto- currency index, but also the first crypto-currency index fund!