CRYPTOCURRENCY AND CRYPTOASSET EXCHANGE INDEX: HUOBI 10
WorldCoinIndex and CRIX are part of the existing cryptocurrency indices that have come up in recent years to try and provide a similar trading environment to what is seen in the traditional stock exchanges. A new index just got launched and it may rise to become the best. The Huobi index or the Huobi 10, launched by Huobi Pro. Huobi Pro is among the top 3 exchanges in the world by 24 hour trading volume. To go along with this, other financial instruments to be introduced will come in the form of crypto ETF and\or Bitcoin ETF(bitcoin index). ETFs are part of the options traditional investors have in the stock markets that can adopted by the cryptoassets exchanges thus providing more investment options, and metrics, in the cryptoassets market space. It was about time applying and incorporating a traditional finance metric in a cryptocurrency exchange took place, recognizing this new asset class
The Huobi Index comes as an aid for investors in the Huobi exchange. There are 233 listed cryptoassets in the Huobi exchange. Investors have no restrictions over the number of assets they can invest in so having an index would better give them a collective performance of their assets. Huobi 10 comprises of the ten most traded cryptoassets against the USDT (Tether) which indicates the total amount in cash that can be gotten from these cryptoassets were they to be liquidated.
Selection of the top ten cryptoassets on Huobi was done using two steps:
1. Grouping the cryptoassets
2. Selecting the cryptoassets with the best average turnover
They were categorized into four groups namely; coin, platform, application and real asset token. From these groups, the best performers were selected for the pilot Huobi Index program. Pasch weighted composite price index was used during the selection process with the base for comparison being the average daily trading volume from the previous trading quarter. Performance of the Huobi 10 as shown from the website screenshot below.
New products based on this index are set for launch next month.
Small history of cryptocurrency indices
The idea of having crypto or bitcoin indices has existed in the cryptocurrency world for quite sometime now. The number of crypto assets available for investors to put their money in has grown over the past few years and tracking all of them in different exchanges can be a tiring situation. There are a lot of statistics involved which requires one to dedicate a lot of time thereby inconveniencing investors. The traditional exchange markets have been using indices and it has worked for investors in these markets. They can easily know how the market they have interested in is fairing on just from the performance of the index where the top stocks are listed. It also gives a broader perspective of what goes on in exchanges. Fluctuations during a trading period may discourage investors from ploughing their money into these assets. Having an index would give the true position of the listed stocks thereby giving investors better information regarding the market.
Performance of Huobi 10
Any cryptocurrency exchange platform can launch their own index and give enormous claims about its capability however, this needs to be backed up by facts. When compared to Bitcoin, the Huobi 10 had an outstanding performance. Data collected between March 2018 to May of the same year, the Huobi 10 alpha had a score of 0.0028 compared to Bitcoin. Its better compared to BTC recorded a score of 0.79. These scores simply show that the Huobi 10 index has the capability to maintain alpha and restrain volatility which is important as the cryptoassets markets are arguably the most volatile markets of this century.
What Huobi 10 means for investors
Opportunities. The efficiency that will result from Huobi 10 will reduce the amount of resources required to monitor different assets thereby providing resources for further investments in the cryptoassets markets. Promoting cryptocurrency investments may also be achieved through Huobi 10. Institutional investor confidence in cryptocurrency is being exercised with caution, for now. The establishment and success of indices such as Huobi 10 could help show investors that the cryptocurrency and cryptoassets market is growing and evolving to a more mature platform than it was when it started.
What about delisted assets?
Huobi has a concrete plan for keeping the index running even when delisting of a cryptoassets occurs unexpectedly. When a delisting occurs, the sample is replaced temporarily. Its replacement comes from the top most ranked coin in the candidate list. This would help keep things running.
More indices to come in future? More big moves?
There are plans to roll out more indices in the future. Investors would therefore have a deeper view of the Huobi exchange platform as these indices would represent different categories of cryptoassets.
Indeed, Huobi is positioning itself to become the world leader in cryptocurrency and cryptoassets exchange market. Interestingly, the native exchange token, Huobi Token, is among the Huobi 10. One of the most stable coins in the recent bear market such a move would only serve to increase its value. Huobi is expanding to different parts of the world. Setting shop in Toronto, Canada would be a strategic move to capture investors from the West as whole. London is the first European city where Huobi has set up shop, and hopefully there are many more to come.
Huobi 10 index: https://www.huobi.pro/huobi_index/
Sign up at Huobi today: https://www.huobi.br.com/en-us/topic/invited/?invite_code=da523