ETmarkets.com approached both the players and tried to find the key differences between the two indices, which would allow users to understand them better.
Number of tokens
CRE8 constitutes the top 8 cryptos based on the market capitalization, excluding stablecoins and derivatives of existing index constituents, said CoinSwitch. “The constituents and their weights are locked in by the 25th of every month.”
For June, the tokens and weights are — Bitcoin (36.2 per cent), Ethereum (23.40 per cent), BNB (11.10 per cent), XRP (6.70 per cent), Cardano (6.30 per cent), Solana (6.10 per cent), Polkadot (5.20 per cent) and Dogecoin (5 per cent).
The total number of constituents in CryptoWire’s IC15 is 15. This index, too, does not have stablecoins among its constituents. Other than the above-mentioned tokens, it also includes Avalanche, Shiba Inu, Polygon, Litecoin, NEAR, Chainlink and Crypto.com Coin.
Denomination of tokens
CoinSwtich’s CRE8 is India’s first benchmark index to measure the performance of the crypto market in rupee terms. The index value is calculated based on actual trades on the CoinSwitch platform.
On the contrary, IC15’s denomination of tokens is in Tether (USDT), a stablecoin as all tokens are traded primarily in USDT and computing the index in their USDT price helps the index minimise tracking error.
Coverage universe of Crypto
CRE8 covers more than 85 per cent of the Indian crypto market in terms of market capitalisation. It caters and appeals more to the needs of Indian users and has been developed for such investors at large.
The IC15 is a global crypto benchmark as it covers more than 85 per cent of the universe of cryptocurrencies traded globally. Even if the stablecoins are included in the universe, IC15 still covers more than 75 per cent of the total crypto market capitalization.
Utility to users
The Indian crypto market is influenced by domestic demand-supply dynamics. The market movement is therefore not a mirror image of the global scenario.
CoinSwtich cited an example from November 2021, when for a few days, due to headlines on regulation, the Indian crypto market saw huge fluctuations whereas the global market was stable.
“CRE8 will provide a true picture of the Indian crypto market and by tracking a basket of large cryptos rather than a single asset, it provides a whole picture of the market,” it said. “CRE8 thus will also help users make better investment decisions.”
IC15 tracks liquid crypto assets globally in a form of a single barometer indicating the pulse of the crypto market, enabling various stakeholders to monitor the performance of cryptocurrencies.
It provides investment managers with a simple and easy mechanism to replicate market trends and create products which are easier to invest like index-based funds, web 3.0 based mutual funds and ETFs, structured products, and more.
According to CyrptoWire, it is easy to create a portfolio around IC15, to navigate through the volatility with very low error possibilities. “It is a useful tool for knowledge, research, training, awareness, information & data partner on cryptocurrency and blockchain markets.”
Rationale behind index
Each crypto or digital asset has unique drivers ranging from adoption, demand-supply and innovation. Therefore, referring to any single crypto’s performance is not representative of the market.
With the Indian crypto investor base increasing significantly, there is a need for a benchmark for assessing the performance of the Indian crypto market. This led to the need for CoinSwtich’s CRE8, which is a reliable and INR-denominated index.
CRE8 is fully transparent and replicable and is refreshed every minute. The index will be rebalanced every month and reconstituted every quarter to reflect the updated state of the Indian crypto market.
On the other hand, replication of the IC15 is efficient and less costly generating very minimal tracking error making it a unique investment benchmark for any asset management service provider.
IC15 is updated on a real-time basis. It is updated with every price change in any of its constituents. Roughly on average, it is computed more than five lakh times on an average trading day.
“Any robotic investment strategy around IC15 is hassle-free and methodologically systematic,” said CrytpoWire. “The main rationale behind the index is to make it an industry barometer.”