- Nasdaq lists the CIX100 crypto-index, Steem is part of it.
- That can mean extra buying power in the future.
- Most cryptocurrency-indices are Bitcoin-overweighted, but not all.
Yesterday I found an interesting article about the CIX100 cryptocurrency index. “Nasdaq Lists an AI-Powered Index of Crypto Market’s Top 100 Performers” – wrote Coindesk.com. The news is interesting because the index, which was launched before, contains also Steem.
Part of the CIX100 index composition (Source)
A large step for Steem?
Steem Is Member Of A Cryptocurrency Index now. But only at place 45 in the CIX100, with a very small, 0.02 percent weight. The index is heavily overweighted with Bitcoin, which has almost 78 percent at the moment. “The index’s ‘Zorax’ algorithm trawls through data from over 1,800 tokens to develop a live account of the marketplace, free of inflated offerings” – wrote Coindesk. (They mean fake volumes are detected and filtered out.)
The CIX100 index (Chart: Tradingview.com)
The importance of indices can be outstanding. In traditional investment world, many investors, institutions are following indices to copy the moves of the whole market. Being included in an index can mean a steep price increase. Falling out from an important index can mean the oblivion for the shares of a company.Maybe not tomorrow already, but someday the participation in an index like this can mean a strong buying power for Steem and other smaller cryptocurrencies. Some institutions prefer large caps only (investments with large capitalization). But perhaps not all of them.
A small crypto-indexologyWhich types of cryptocurrency indices can we use? How to compare Steem with other cryptocurrencies? Is Steem A Large Cap, Or A Mid Cap Cryptocurrency? – I asked in May.
CMC Crypto 200 Ex Bitcoin Index and CMC Crypto 200 Index (Chart: Tradingview.com )
One of the problems is Bitcoin’s huge weight on the market, 66.1 percent at the time of writing. (Called “Bitcoin dominance”.) Many other known cryptocurrencies don’t even reach 0.1 or 0.01 percent of Bitcoin. They are practically invisible in a classic, capitalization-weighted index.
Don’t compare apples with bananas
Another issue is, there are big differences in use cases and functions of the cryptos. Some are only transaction-oriented, cash-like assets. Others, like Steem or Ether, EOS, are made for smart contracts and have their own “economies”. They are powering games, gambling sites, media applications, poll system and much much more.
Putting various types of cryptos in the same index could be misleading. Like mixing Euros, gold, and shares of Johnson & Johnson in the same group. Cash with manufacturing and treasures.
I made a little search and found various cryptocurrency indices:
- CRIX CRipto IndeX This index is a typical large-capitalization (large cap) index. Very large, or giant cap index, I would say. It has only five members, Bitcoin has 80 percent of weight. (+ Ethereum, XRP, LTC and Bitcoin Cash are in.)
- “CCi30 is a rules-based index designed to objectively measure the overall growth, daily and long-term movement of the blockchain sector. It does so by tracking the 30 largest cryptocurrencies by market capitalization.” Another Large-cap index, then.
- Bloomberg Galaxy Crypto Index (BGCI) “measures the performance of ten USD-traded cryptocurrencies, including Bitcoin, Ethereum, Monero, Ripple, and Zcash.” The big ones, again.
- “CMC Crypto 200 Ex Bitcoin Index” and “CMC Crypto 200 Index” are products of Solactive and Coinmarketcap.com. Bitcoin is excluded in the first one but the exact composition was not published. I can only suppose that Steem is among the 200 leading cryptocurrencies.
The two last indices, CMC Crypto 200 with and without Bitcoin, you can compare in the second chart. The chart begins in March, unfortunately, but this year’s altcoin-underperformance is clearly visible. The Bitcoin-lead index is 53 percent up and the pure altcoin-index is one percent down.
I have investments in Steem, Bitcoin, and Ether at the time of writing.
I’m not a certified financial advisor nor a certified financial analyst, accountant nor lawyer. The contents on my site and in my posts are for informational and entertainment purposes and reflecting my collection of data, ideas, opinions. Please, make your proper research, or consult your advisors before making any investment or financial or legal decisions.