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India’s Cryptocurrency future with IC15, understanding in detail

India’s Cryptocurrency future with IC15, understanding in detail

IC15, India’s first cryptocurrency index, was just launched by Superapp CryptoWire and will track the performance of the 15 most widely traded cryptocurrencies listed on prominent crypto exchanges by market capitalization.

What is the structure of IC15?

CryptoWire has formed an Index Committee made up of domain experts, industry practitioners, and academics who will choose cryptocurrencies among the top 400 by market capitalization. The qualified cryptocurrency must have traded on at least 90% of the days during the review period and be one of the top 100 most liquid in terms of trading value. In terms of circulating market capitalization, the cryptocurrency should also be in the top 50. The top 15 cryptocurrencies will then be chosen by the committee. The index will be updated on a quarterly basis.

What is the importance of this?

IC15, according to CryptoWire, can be used to create index-linked products like index funds and exchange-traded funds (ETFs). Typically, the performance of a mutual fund plan is measured against a benchmark, such as the Nifty or the Sensex total return index. IC15 is the first index in India that may be used as a benchmark for both the underlying cryptocurrency market and fund managers’ performance. Furthermore, robo-advisors, which offer financial advice with little to no human participation, can use this index to construct lower-cost investment products.

What is the relationship between IC15 and other market indicators?

The index’s base value was 10,000 on April 1, 2018, indicating it has risen 615 percent in absolute terms to 71,475.48 by December 31, 2021. In 2021, the IC15 returned 138 percent, compared to a 24 percent return for the Nifty 50, a -3 percent return for gold, and a 27 percent return for the S&P 500. Increases in IC15 do not match gains in other asset classes because the index has a poor correlation with them.

Can crypto investing risks be lessened with these indexes?

Because a fund invests in a basket of assets rather than a few limited coins, index investing can be an effective strategy to diversify against risks. However, index-based investment may not completely eliminate the risks connected with crypto assets. For example, in 2018, the IC15 index fell by 50%, whereas other asset classes only fell by 3-4 percent. Furthermore, the index’s combined weightage of bitcoin and ethereum is 77 percent, making it extremely exposed to any fluctuation in these two coins.

Is it possible to start crypto funds in India?

Ajay Tyagi, chairman of the Securities and Exchange Board of India, recently warned mutual fund houses not to create crypto-based products until the government issues clear regulations. As a result, asset management firms will be unable to develop crypto funds based on IC15 for the time being. Crypto platforms, on the other hand, can provide goods based on the index in the absence of any rules. Last year, Mudrex, a global crypto investment platform, created Coin Sets, which are crypto funds based on themes like decentralised finance or market cap.

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