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Understanding IC15 – India’s first Cryptocurrency Index

By January 11, 2022January 14th, 20224 minute read
Note: This blog is written by an external blogger. The views and opinions expressed within this post belong solely to the author.

The cryptocurrency landscape in India is progressing rapidly. Despite the cloudy state of regulations in the nation, the community seems to have been continually growing as more market participants hop in. The growing demand has resulted in an array of pro-crypto developments, with the most recent being India’s very own cryptocurrency index.

Due to the burgeoning crypto business in India, several players have expressed an interest in making investments and providing services to Indian investors. In that endeavour, cryptocurrency app CryptoWire has established a specific index for Indian investors. The index, dubbed IC15, is the nation’s first of its kind and will track the performance of the world’s 15 most actively traded cryptocurrencies.

But before we delve deeper, many of you must be wondering what an index is and what purpose it serves.

What is a Crypto index? What does it do?

A Crypto Index is a predetermined portfolio of selected cryptocurrencies that you may purchase, sell, or exchange with a single click, rather than concentrating exclusively on the process of buying and selling each cryptocurrency individually. It enables you to diversify your cryptocurrency holdings easily. Additionally, your portfolio is rebalanced automatically monthly to reflect the most recent market data – This process is known as “rebalancing”.

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What is the IC15 Crypto index?

CryptoWire, a Mumbai-based startup, developed IC15, which is a unit of TickerPlant, a provider of crypto market intelligence.

The IC15 index is a market capitalization and rule-based broad market index that tracks the performance of the world’s most liquid cryptocurrencies. The index will aid crypto enthusiasts and participants in monitoring the movement of cryptocurrencies on global markets. The IC15 index features a governing council composed of industry practitioners, domain experts, and academics. They will be responsible for maintaining and evaluating the index, as well as reordering the top 15 cryptocurrencies. According to the firm, the index was developed to shed light on crypto mining and aid investors in making informed risk-mitigation decisions.

Why is IC15 an important development for the cryptocurrency industry in India?

In layman’s terms, IC15 itself isn’t much of a useful thing for the average investor. However, it will play a crucial role in laying the foundation for various crypto-related products for the traditional markets and accredited investors.

Crypto ETFs and funds, for example, will benefit from a cryptocurrency index, according to CrytoWIre. It will function as a performance indicator for fund managers. The underlying crypto market’s IC15 is a comprehensive portrayal of overall market sentiments. It will also make maintaining a diverse portfolio much easier. Investors in the bitcoin trading business will benefit from this index’s unique positioning in derivatives trading.

The index will keep tabs on the top 15 cryptocurrencies as listed on key exchanges across the world. These cryptocurrencies are Bitcoin, Bitcoin Cash, Ethereum, Cardano, Litecoin, XRP, Binance Coin, Chainlink, Uniswap, Dogecoin, Polkadot, Solana, Avalanche, Terra, and Shiba Inu.

How does a cryptocurrency qualify to be on the index?

To be considered for a spot on the list, a cryptocurrency must meet the following criteria:

  • Must be traded for at least 90% of the review period specified
  • Must be one of the world’s top 100 most liquid cryptocurrencies by trading value
  • Must be one of the world’s top 50 cryptocurrencies by circulating market capitalization

How is the Index Value determined?

This is a pre-weighted index, which implies that each cryptocurrency will be assigned a weighting proportional to its current market price. In the instance of IC15, the following weightage will apply:

Bitcoin – 51.57

Ethereum – 25.79

Binance Coin — 5.03

Other Altcoins – the remainder, each with a maximum weightage of 5

The divisor will be calculated using the total market capitalization of all index members on the base date. The index is normalized at each rebalancing period by multiplying it by a specified normalizing factor.

The IC15’s base value is 10,000, and the base date is April 1, 2018. As of December 31, 2021, the index has increased by 615 percent to 71,475.18.

The index will be reviewed and scrutinized for review and rebalancing on a quarterly basis. The review deadline has previously been established at the 15th calendar day of March, June, September, and December.

Bottom line

Cryptocurrencies have entered a corrective phase following a strong run-up in 2021. In addition, the Reserve Bank of India has issued warnings not to use cryptos, which has put digital currencies under more pressure as well. Despite that, innovation has been unscathed. 

The cryptocurrency market is more volatile than stock markets and can be harmful to investors, particularly individual investors who participate without sufficient expertise. While several prominent platforms such as WazirX have offered investment instruments and promoted crypto education amongst the masses, the nation lacked a dedicated crypto index. However, IC15 has since filled that void.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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